SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under ss. 240.14a-12
Aradyme Corporation
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
n/a
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
_________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
5) Total fee paid:
_________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:___________________________________
2) Form, Schedule or Registration Statement No.: ____________
3) Filing Party:_____________________________________________
4) Date Filed:_______________________________________________
ARADYME CORPORATION
1255 North Research Way, Suite Q3500
Orem, Utah 84097
Telephone: (801) 705-5000
Facsimile: (801) 705-5001
November 13, 2006
Dear Aradyme Stockholder:
Our Proxy Statement for the 2006 Annual Stockholders' Meeting of
Aradyme Corporation and our 2005 Annual Report are enclosed. At this meeting, we
will seek your support for the election of directors, approval of the change of
our domicile from Delaware to Utah, approval of an amendment to our Certificate
of Incorporation increasing our authorized capitalization from 50,000,000 to
150,000,000 shares of common stock, and approval of a 2006 Long-Term Incentive
Plan.
These are important considerations for all stockholders. Therefore, the
board of directors urges you to review each of these proposals carefully. The
enclosed proxy statement discusses the intended benefits as well as possible
disadvantages of these proposals.
Your board of directors believes that the adoption of each of the
proposals is in the best interests of all stockholders.
Sincerely,
ARADYME CORPORATION
James R. Spencer
President and Chief Executive Officer
ARADYME CORPORATION
1255 North Research Way, Suite Q3500
Orem, Utah 84097
Telephone: (801) 705-5000
Facsimile: (801) 705-5001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 22, 2006
To the Stockholders of Aradyme Corporation:
Aradyme Corporation's 2006 Annual Stockholders' Meeting (the "Annual
Meeting") will be held December 22, 2006, at the company's office in Building Q,
Suite 3500, 1255 North Research Way, Orem, Utah. The Annual Meeting will convene
at 11:00 a.m., local time, to consider and take action on the following
proposals:
(1) to elect each of the following nominees to serve as a director
for a term expiring at our 2007 Annual Meeting of the
Stockholders and until a successor is elected and qualified;
(2) to approve of the change in our domicile from Delaware to
Utah, to be effected pursuant to an Agreement and Plan of
Merger dated effective February 22, 2006, by and between us
and Aradyme Development Corporation, a Utah corporation that
is our wholly-owned subsidiary ("Aradyme Utah"), pursuant to
which we will merge with and into Aradyme Utah and Aradyme
Utah will survive the merger (approval of this change in
domicile proposal will constitute approval of the merger and
the Agreement and Plan of Merger);
(3) to approve an amendment to the our Certificate of
Incorporation to increase our capitalization from 50,000,000
to 150,000,000 shares of common stock (in the event that
Proposal 2 is approved by the stockholders, this proposal
shall be deemed to relate to the Articles of Incorporation of
Aradyme Utah);
(4) to approve our 2006 Long-Term Incentive Plan (in the event
that Proposal 2 is approved by the stockholders, the 2006
Long-Term Incentive Plan shall be deemed adopted by Aradyme
Utah);
(5) to transact such other business as may properly come before
the Annual Meeting or any adjournment(s) thereof.
Only owners of record of our common stock outstanding as of the close
of business on November 8, 2006 (the "Record Date"), will be entitled to notice
of and to vote at the Annual Meeting. Each share of common stock is entitled to
one vote.
Holders of at least a majority of the shares of common stock
outstanding on the Record Date must be represented at the meeting to constitute
a quorum for conducting business.
The attendance at and/or vote of each stockholder at the Annual Meeting
is important, and each stockholder is encouraged to attend.
ARADYME CORPORATION
By Order of the Board of Directors
Merwin D. Rasmussen, Secretary
Orem, Utah
November 13, 2006
IMPORTANT
Regardless of whether you plan to attend the meeting in person, please fill in,
sign, date, and return the enclosed proxy promptly in the self-addressed,
stamped envelope provided. No postage is required if mailed in the United
States. If you prefer, you may send your proxy to us by facsimile transmission
at 1-801-705-5001.
SPECIAL REQUEST
If your shares are held in the name of a brokerage firm, nominee, or other
institution, only it can vote your shares. Please contact promptly the person
responsible for your account and give instructions for your shares to be voted.
ARADYME CORPORATION
1255 North Research Way, Suite Q3500
Orem, Utah 84097
Telephone: (801) 705-5000
Facsimile: (801) 705-5001
PROXY STATEMENT
INTRODUCTION
This proxy statement is furnished in connection with the solicitation
of proxies, on behalf of our management, to be voted at the Annual Meeting to be
held at our office in Building Q, Suite 3500, 1255 North Research Way, Orem,
Utah, on December 22, 2006, at 11:00 a.m., local time, or at any adjournment
thereof. The enclosed proxy, when properly executed and timely returned, will be
voted at the Annual Meeting in accordance with the directions set forth thereon.
If no instructions are indicated on the enclosed proxy, the proxy will be voted
as follows at the Annual Meeting:
(1) FOR the election of the nominees of management set forth
herein as our directors to serve as directors until the
expiration of their respective terms and until their
successors are elected and qualified;
(2) FOR change of our domicile from Delaware to Utah, to be
effected pursuant to an Agreement and Plan of Merger dated
effective February 22, 2006, by and between us and Aradyme
Development Corporation, a Utah corporation and our
wholly-owned subsidiary ("Aradyme Utah"), pursuant to which we
will merge with and into Aradyme Utah, and Aradyme Utah will
survive the merger, including approval of the merger and the
Agreement and Plan of Merger;
(3) FOR approval of an amendment to our Articles of Incorporation
to increase our capitalization from 50,000,000 to 150,000,000
shares of common stock (in the event Proposal 2 is approved by
the stockholders, this proposal will be deemed to relate to
the Articles of Incorporation of Aradyme Utah);
(4) FOR approval of our 2006 Long-Term Incentive Plan; and
(5) IN accordance with the best judgment of the persons acting as
proxies on other matters presented for a vote.
Purpose of the Proxy Statement and Proxy Card
You are receiving a Proxy Statement and Proxy Card from us because you
owned shares of our common stock on November 8, 2006, the record date. This
Proxy Statement describes proposals that are being submitted to our stockholders
at our Annual Meeting so that you can make informed decisions in connection with
your votes. When you sign the Proxy Card, you appoint James R. Spencer and
Merwin D. Rasmussen, both of whom are our officers and directors, as your
representatives for the Annual Meeting. At the Annual Meeting, James R. Spencer
and Merwin D. Rasmussen will vote your Aradyme shares as you have instructed
them on the Proxy Card. If you sign and return a Proxy Card without giving
specific voting instructions, your shares will be voted as recommended by the
board of directors. This way, your shares will be voted whether or not you
attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we
recommend that you complete, sign, and return your Proxy Card in advance of the
Annual Meeting in the event your plans change.
Voting Methods
You May Vote by Mail. To vote by mail, please sign your Proxy Card and
return it in the enclosed and addressed envelope. If you mark your voting
instructions on the Proxy Card, your shares will be voted as you instruct.
1
You May Vote by Facsimile. To vote by fax, please sign your Proxy Card
and send it by fax to us, Attention Scott Mayfield at (801) 705-5001. If you
mark your voting instructions on the Proxy Card, your shares will be voted as
you instruct.
Shares Held in Street Name. If your shares are held in street name,
then only your brokerage firm, bank, nominee, or other institution can sign a
Proxy Card with respect to your shares, and then only upon specific instructions
from you. Holding shares in "street name" means your shares of stock are held in
an account by your stockbroker, bank, or other nominee, and the stock
certificates and record ownership are not in your name. If your shares are held
in street name, your broker, bank, or nominee will likely include a voting
instruction card with this Proxy Statement. You should vote your shares by
following the instructions provided on the voting instruction card.
You May Vote in Person at the Meeting. We will pass out written ballots
to anyone that wants to vote at the Annual Meeting. If you hold your shares in
street name and you wish to vote at the Annual Meeting, you must first request a
legal proxy from your stockbroker, which means you must notify your broker,
bank, or other nominee and obtain the proper documentation to vote your shares
at the Annual Meeting.
You May Change Your Mind after You Have Returned Your Proxy. If you
change your mind after you return your proxy, you make revoke your proxy at any
time before the polls close at the meeting. You may do this by (i) signing
another proxy with a later date; or (ii) voting in person at the Annual Meeting.
Quorum Requirement; Voting Requirement
Shares are counted as present at the Annual Meeting if the stockholder
either (i) is present and votes in person at the Annual Meeting; or (ii) has
properly submitted a proxy card. A total of 34,442,046 shares may vote at the
Annual Meeting. A majority of those shares must be present at the Annual Meeting
(either in person or by proxy) to hold the Annual Meeting and conduct business.
This is called a "quorum." Under Delaware corporate law and our Certificate of
Incorporation and Bylaws, the election of directors requires the vote of a
plurality of the shares present at the Annual Meeting. Abstentions and broker
non-votes will not be counted for the election of directors. The proposed merger
that would result in the change of our domicile from Delaware to Utah and the
proposed amendment to our Certificate of Incorporation to increase our
authorized shares of common stock will be considered approved by the
stockholders if approved by the holders of a majority of the outstanding common
stock at a meeting of the stockholders at which a quorum is present. Therefore,
abstentions and broker non-votes will have the same effect as a vote against
these proposals. The 2006 Long-Term Incentive Plan requires the approval of a
majority of the shares present, in person or by proxy, and voting at the Annual
Meeting. Abstentions and broker non-votes are not counted, except for
determining the presence of a quorum.
Consequences of Not Returning Your Proxy; Broker Non-Votes
If your shares are held in your name, you must return your proxy (or
attend the Annual Meeting in person) in order to vote on the proposals that are
being submitted to the stockholders.
If your shares are held in street name and you do not vote your proxy,
your brokerage firm may either: (i) vote your shares on routine matters; or (ii)
leave your shares unvoted. Under the rules that govern brokers that have record
ownership of shares that are held in street name for their clients, brokers may
vote such shares on behalf of their clients with respect to "routine" matters
but not with respect to nonroutine matters. We believe the proposals to change
our domicile from Delaware to Utah and to increase our capitalization from
50,000,000 to 150,000,000 shares of common stock are not routine and that
brokers will likely not vote on these proposals. This is called a "broker
non-vote."
Broker non-votes will be counted for the purpose of determining the
presence or absence of a quorum, but will not be counted for the purpose of
determining the number of votes cast.
We encourage you to provide instructions to your brokerage firm by
voting your proxy. This ensures that your shares will be voted at the Annual
Meeting.
2
Vote Solicitation; No Use of Outside Solicitors
We are soliciting your proxy to vote your shares at the Annual Meeting.
In addition to this solicitation by mail, our directors, officers, and other
employees may contact you by telephone, via Internet, in person, or otherwise to
obtain your proxy. These persons will not receive any additional compensation
for assisting in the solicitation. We will also request brokerage firms,
nominees, custodians, and fiduciaries to forward proxy materials to the
beneficial owners. We will reimburse these entities and our transfer agent for
their reasonable out-of-pocket expenses in forwarding the proxy material. We
have not retained the services of a proxy solicitor with respect to this
solicitation.
Voting and Attendance of our Officers and Directors
Officers and directors holding an aggregate of 12,279,294 shares of our
common stock, or approximately 35.7% of the outstanding shares, have indicated
their intent to vote in favor of all proposals.
In addition, Merwin D. Rasmussen, our secretary and a director, who has
the right to vote 10,774,515 shares of our common stock, has obtained the proxy
of certain stockholders holding an aggregate of 7,085,871 shares of common stock
enabling him to vote those shares on Proposal 3, which would increase our number
of authorized shares of common stock from 50,000,000 to 150,000,000. Mr.
Rasmussen has indicated he intends to vote those shares in favor of Proposal 3.
Accordingly, an aggregate of 17,860,386 shares, or 51.9% of our shares entitled
to vote at the meeting, have indicated their intent to vote for Proposal 3 to
increase our authorized capitalization.
Additional Matters To Consider
We need additional funding in order to continue our activities and
expect that our principal source of capital will be the sale of equity
securities through our amended agreement with Eagle Rock Capital, LLC (which is
owned by Merwin D. Rasmussen, our secretary and a director), which provides for
a purchase price of $0.20 per share and the issuance of warrants with an
exercise price of $0.40 per share. Since April 17, 2006, the trading price for
our common stock has not exceeded $0.30 per share, and as of the date of this
proxy statement was $0.11 per share. Because the trading price of our common
stock is now approximately one-half of what it was in April 2006, we believe it
is unlikely that we will be able to obtain much-needed funding unless we agree
to amend our agreement with Eagle Rock Capital to reduce the price of the common
stock and the exercise price of the warrants available for it to purchase
(perhaps including the exercise price of the already-purchased warrants held by
Eagle Rock Capital) or search other equity financing with similarly reduced
terms or reflecting contemporary trading market prices.
Eagle Rock Capital also has the right under the amended agreement to
require us to appoint its designee as a member of our board of directors. In the
event that Eagle Rock Capital exercises that right, we anticipate that our board
of directors would vote to increase the size of our board by one and then
appoint Eagle Rock's designee to the newly-created seat.
In addition, in obtaining funding, we may agree to certain conditions,
such as representation on our board of directors, changes to our business plan
or management team, or the creation of a series of preferred stock with
preferences over common stock in regard to dividends, liquidation, and similar
matters.
Our policy is that each of our officers and each member of our board of
directors are encouraged, but not required, to attend the Annual Meeting.
CORPORATE GOVERNANCE
Our Certificate of Incorporation provides for the election of the
entire board of directors at each annual meeting of stockholders, with each
director to serve until the next annual meeting and until such director's
successor is elected and qualified.
3
Executive Officers, Directors; Nominees
The following sets forth the name, age, term of directorship, and
principal business experience of each of our executive officers, directors, and
nominees for election to the board of directors.
Year
-----------------
Director Term Business Experience During Past
Name Age Since Expires Five Years and Other Information
----------------------- ----- -------- -------- -------------------------------------------------------------------
Directors
James R. Spencer 42 2003 2006 Mr. Spencer became our chief executive officer on March 31, 2003,
as a result of our reorganization with Aradyme Development
Corporation, and president in January 2006. Mr. Spencer became
chairman of our board in May 2003. Mr. Spencer served as chief
executive officer of Aradyme Development Corporation from
September 2001 through March 31, 2003, and was also a director
from February 2001 through March 31, 2003. Before joining
Aradyme Development Corporation, Mr. Spencer was a founder,
senior partner, and president at Tanner Spencer Group, Orem,
Utah, from June 1997 through June 2001, where he directed,
consulted, and executed marketing and general business strategies
and tactics for both private and publicly-held companies and
their products. He has also served in management positions for
SoftSolutions, Inc., Orem, Utah, from 1989-1993, and Novell,
Inc., Provo, Utah, from 1993-1997. He received his B.S. in
Business Finance from Brigham Young University, Provo, Utah.
Merwin D. Rasmussen 53 2003 2006 Mr. Rasmussen became our corporate secretary and a director on
March 31, 2003, as a result of its reorganization with Aradyme
Development Corporation. Mr. Rasmussen served as Aradyme
Development Corporation's corporate secretary and a director from
February 2001 through March 31, 2003. Mr. Rasmussen also has
been an independent contract anesthetist since 1982 and Chief
Obstetrical Department Anesthetist at Pioneer Valley Hospital,
West Valley City, Utah, since 1986. Mr. Rasmussen's anesthesia
practice is conducted through Merwin D. Rasmussen, P.C., of which
he is the president and only stockholder. From June 1995 to the
present, Mr. Rasmussen has been an owner and director of Enviro
Fresh, Inc., a finance company located in Salt Lake City, Utah.
Mr. Rasmussen has conducted business as Eagle Rock Funding, Salt
Lake City, Utah, a mortgage finance company, since July 1999.
Additionally, in December 2003, he organized MVP Properties, LLC,
which in November 2005 changed its name to Eagle Rock Capital,
LLC, an equity investment fund with an investment contract with
us. See Certain Relationships and Related Transactions. Mr.
Rasmussen was the manager/director of Synergy Limited, LLC, which
owned and operated Gold's Gym, a fitness franchise in West Valley
City, Utah, from June 2001 through December 2003. Mr. Rasmussen
received a degree in anesthesia in 1980 from Minneapolis School
of Anesthesia, Minneapolis, Minnesota.
4
Year
-----------------
Director Term Business Experience During Past
Name Age Since Expires Five Years and Other Information
----------------------- ----- -------- -------- -------------------------------------------------------------------
Nominee:
Jeffrey S. Bennion 36 -- -- Mr. Bennion currently serves as vice president of development and
investor relations for the Bennion Investment Group, a real
estate development, property management, and investment company.
He has more than 18 years of experience in the information
technology industry. In 1994, he founded and operated his own
information technology services and development company until
1998, when he joined Entevo Software, a start-up software company
in Arlington, Virginia, that was later acquired by Symantec. At
Entevo, Mr. Bennion served as sales engineer and manager of
technical support until 2005, when he joined Approva Software,
Reston, Virginia, a provider of controls monitoring solutions for
enterprise resource planning systems, as manager of technical
projects. For much of his career, Mr. Bennion has focused on
directory migrations and security, and has consulted with many of
the world's largest companies and U.S. governmental agencies on
migrations, security, regulatory compliance, and enterprise
resource planning implementations. In 2005, Mr. Bennion joined
the Bennion Investment Group, a privately-held, real estate
investment and development company that develops and manges
commerical, industrial, residential, and hospitality properties
in Utah, Colorado, Idaho, and Hawaii. Mr. Bennion holds a B.S.
in Psychology from the University of Utah, Salt Lake City, Utah.
Executive Officer
Scott A. Mayfield 51 -- -- Mr. Mayfield became our chief financial officer on July 8, 2004.
Mr. Mayfield has an extensive background in finance with over 25
years of experience in the manufacturing industry. He has worked
for both private and public corporations of all sizes holding a
variety of positions from controller to chief financial officer.
He has actively participated in a number of highly successful
mergers and acquisitions, public and private offerings, and other
critical negotiations. During the past 15 years, Mr. Mayfield
has worked in the high-tech medical device industry for companies
such as CR Bard, Murray Hill, New Jersey, from 1988 to 1992,
InnerDyne, Inc., Salt Lake City, Utah (now a division of U.S.
Surgical), from 1992 to 1998, and most recently as vice president
finance and administration for a division of Boston Scientific
Corporation in Salt Lake City, Utah, from 1998 to 2004. Mr.
Mayfield is a certified public accountant with a B.S. in Finance
and an M.B.A. in Finance and Management from the University of
Utah, Salt Lake City, Utah.
Board of Directors' Meetings and Committees
Board of Directors
Our board of directors held 14 meetings during 2005 and eight meetings
to date in 2006. The directors also discussed our business and affairs
informally on numerous occasions throughout the year and took several actions
through unanimous written consents in lieu of meetings.
Neither member of our current board of directors would be considered
independent under NASD Rule 4200(a)(15). Jeff Bennion would be considered
independent under NASD Rule 2400(a)(15) if elected to our board.
5
We do not have any board committees. Our board as a whole acts as the
audit committee and nomination committee, as it has not been feasible to appoint
a separate committee from a two- or three-member board. The board is willing to
consider written suggestions for nominations to the board of directors, which
may be sent to our officers at 1255 North Research Way, Suite Q3500, Orem, Utah
84097. The board selects nominees for our board of directors based on the
board's assessment of their skills, qualifications, and ability to create value
for our stockholders.
Policy on Stockholder Communications with Directors
Corporation stockholders that want to communicate with the board of
directors or with any individual director can write to us at 1255 North Research
Way, Suite Q3500, Orem, Utah 84097. Such letter should indicate that it is from
a Corporation stockholder. Depending upon the subject matter, management will:
o forward the communication to the director or directors to whom
it is addressed;
o attempt to handle the inquiry directly if it is a request for
information about us or other matter appropriately dealt with
by management; or
o not forward the communication if it is primarily commercial in
nature or if it relates to an improper or irrelevant topic.
At each board of directors' meeting, a member of management will
present a summary of all communications received since the last meeting that
were not forwarded to the directors and make those communications available to
the directors on request.
Code of Ethics
We have adopted a code of ethics that applies to all of our employees,
including our executive officers. A copy of the code of ethics was included as
Exhibit 14.01 of Form 10-KSB/A for the year ended September 30, 2003, filed on
January 30, 2004.
Stockholder Proposals
No proposals have been submitted by our stockholders for consideration
at the Annual Meeting. It is anticipated that the next annual meeting of
stockholders will be held during October 2007. Stockholders may present
proposals for inclusion in the proxy statement to be mailed in connection with
our 2007 Annual Meeting of Stockholders, provided such proposals are received no
later than July 7, 2007, and are otherwise in compliance with applicable laws
and regulations and the governing provisions of our Certificate of Incorporation
and Bylaws.
PROPOSAL 1. ELECTION OF DIRECTORS
Our Certificate of Incorporation and Bylaws provide that the board of
directors shall be elected at each annual meeting of stockholders, but if any
such annual meeting is not held or the directors are not elected at such a
meeting, the directors may be elected at any special meeting of stockholders
held for that purpose. All directors hold office until their respective
successors are elected and qualified, subject to the Delaware General
Corporation Law and the provisions of our Bylaws with respect to vacancies on
the board of directors.
The board of directors has unanimously nominated James R. Spencer,
Merwin D. Rasmussen, and Jeff Bennion for election as our directors at the
Annual Meeting, each to serve for a term expiring at the 2007 annual meeting and
until his successor is elected and qualified.
6
Votes will be cast, pursuant to authority granted by the enclosed
proxy, when properly executed and returned to us, for the election of the
nominees named above as our directors, except as otherwise specified in the
proxy. In the event a nominee shall be unable to serve, votes will be cast,
pursuant to authority granted by the enclosed proxy, for such person as may be
designated by the board of directors. Our officers are elected at the annual
meeting of the board of directors to hold office until their respective
successors are elected and qualified. The information concerning the nominees
and directors and their security holdings has been furnished by them to us.
Biographical information and business experience of each person nominated and
for each director whose term of office will continue after the Annual Meeting
are discussed above. (See Corporate Governance: Executive Officers, Directors,
Nominees.)
Recommendation of the Board of Directors
The board of directors recommends a vote "FOR" the election of the
nominees James R. Spencer, Merwin D. Rasmussen, and Jeff Bennion as our
directors, to serve in such capacities until the expiration of their term at the
2007 annual meeting of stockholders and until their successors are elected and
qualified.
Vote Required
Directors are elected by the affirmative vote of the holders of a
plurality of the shares of common stock voted at the Annual Meeting. Abstentions
and broker non-votes will not be counted in the election of directors.
PROPOSAL 2. CHANGE OF DOMICILE FROM DELAWARE TO UTAH
General
Our board of directors has approved changing our domicile from Delaware
to Utah (the "Domicile Change") and a related Agreement and Plan of Merger (the
"Merger Agreement"). The Domicile Change will be effected by our merger into
Aradyme Development Corporation ("Aradyme Utah"). Aradyme Utah is our
wholly-owned subsidiary incorporated in Utah whose principal executive office is
located at 1255 North Research Way, Suite Q3500, Orem, Utah 84097 and whose
telephone number is (801) 705-5000 and facsimile number is (801) 705-5001.
Aradyme Utah currently has no operations, but after the merger will undertake
the same business as currently conducted by us. A copy of the Merger Agreement
is attached at Appendix A. Stockholders will be asked to approve the Domicile
Change and the Merger Agreement at the Annual Meeting.
If the Merger Agreement is duly authorized and adopted by the requisite
votes of stockholders and is not terminated and abandoned pursuant to the
provisions of the Merger Agreement, a Certificate of Merger shall be filed with
the Delaware Secretary of State and Articles of Merger shall be filed with the
Utah Department of Commerce, Division of Corporations and Commercial Code. The
merger and Domicile Change shall be effective immediately upon the
aforementioned filings. If approved, we expect that the merger and Domicile
Change will become effective on a date as soon as practicable after the Annual
Meeting (the "Effective Date"). On the Effective Date, our existing stockholders
will become stockholders of Aradyme Utah, and our separate legal existence will
terminate. However, the Domicile Change will not result in any substantive
change in our business, directors, management, assets, liabilities, net worth,
operations, or financial statements or any change in the ownership interest of
any of our stockholders. In addition, on the Effective Date, the name of Aradyme
Development Corporation will be changed to Aradyme Corporation.
Adoption and approval of the Domicile Change and the Merger Agreement
will affect certain rights of stockholders; accordingly, stockholders are urged
to read carefully this entire proxy statement and the attachments hereto.
7
Reasons for Approval of the Merger Agreement
Our board of directors believes that the Domicile Change is in the best
interests of our company and our stockholders. Our principal offices and all of
our employees are located in Utah, making incorporation in Utah convenient for
us. Additionally, our board of directors expects changing our domicile from
Delaware to Utah will result in significant savings to us. Utah does not assess
a franchise tax on its corporations. Although we paid $207 in franchise taxes to
the state of Delaware in 2005, we expect that amount to increase as our assets
increase or if we increase our capitalization. Furthermore, if the Domicile
Change becomes effective, we will no longer have to pay to maintain a registered
agent for service of process in the state of Delaware. We already are required
to qualify to do business in the state of Utah, so we will not incur additional
expense in that regard.
After considering the advantages and disadvantages of the proposed
Domicile Change, including the differences between the Utah Revised Business
Corporation Act ("Utah Act") and the General Corporation Law of the State of
Delaware ("Delaware Code"), the board of directors has concluded that it is in
the best interests of our company and stockholders to change our domicile from
Delaware to Utah.
Certain Consequences of the Merger
Management after the Merger. Upon effectiveness of the merger, the
board of directors of Aradyme Utah will consist of those persons serving on our
board of directors immediately prior to the Effective Date of the merger. The
directors will continue to hold office as directors of Aradyme Utah for the same
term for which they would otherwise serve as our directors and will be subject
to reelection at the 2007 Annual Meeting of Stockholders of Aradyme Utah. The
individuals serving as our executive officers immediately prior to the Effective
Date of the merger will serve as executive officers of Aradyme Utah upon the
effectiveness of the merger.
Capitalization. Our Delaware Certificate of Incorporation authorizes us
to issue 50,000,000 shares of common stock, $0.001 par value, and 1,000,000
shares of preferred stock, $0.001 par value. As of October 17, 2006, 34,442,046
shares of common stock were issued and outstanding, and there were no shares of
preferred stock issued and outstanding.
Upon effectiveness of the merger, our authorized common stock and
preferred stock will remain at 50,000,000 shares and 1,000,000 shares,
respectively. Note, however, that if Proposal 3, as described elsewhere in this
proxy statement, is approved by the stockholders, our authorized common stock
and Aradyme Utah's common stock will be increased to 150,000,000 shares. The
relative rights and limitations of the common and preferred stock will remain
unchanged after the merger.
Common Stock Options. Unexpired, unexercised outstanding options to
purchase our common stock will be deemed to be valid options issued by Aradyme
Utah to purchase shares of common stock of Aradyme Utah on the same terms and
conditions as presently provided. Our existing stock option plans and the 2006
Long-Term Incentive Plan will not be changed in any material respect by the
merger.
Our Indebtedness. All of our indebtedness outstanding at the Effective
Date of the merger will become the obligations of Aradyme Utah in connection
with the merger. To our knowledge, no indebtedness will be accelerated as a
result of the proposed transaction.
Stock Certificates. Our stockholders will not have to exchange their
existing stock certificates for stock certificates of Aradyme Utah. However,
after consummation of the Domicile Change and the merger, any stockholder
desiring a new form of stock certificate may submit the existing stock
certificate to Aradyme Utah's transfer agent for cancellation and obtain a new,
Utah form of certificate.
Regulatory Requirements. To the best of our knowledge, we are not
required to comply with any federal or state regulatory requirements other than
the filing of Articles of Merger and a Certificate of Merger with the Utah
Department of Commerce, Division of Corporations and Commercial Code, and the
Delaware Division of Corporation, respectively, or to seek any federal or state
regulatory approvals in connection with the merger.
8
Trading of Aradyme Utah Common Stock. Our common stock is currently
quoted on the National Association of Securities Dealers Automated Quotation
System Over-the-Counter Electronic Bulletin Board ("OTCBB") under the symbol
"ADYE." The closing sale price for our common stock on October 17, 2006, was
$0.11 per share, and the best offer and best bid prices were $0.12 and $0.10,
respectively. We anticipate that our common stock will be quoted on OTCBB under
the market symbol ADYE, without interruption, and that the OTCBB will consider
the delivery of our existing stock certificates as constituting "good delivery"
of shares of Aradyme Utah in transactions subsequent to the merger.
Federal Income Tax Consequences. We anticipate that the merger will be
treated as a tax-free reorganization under the Internal Revenue Code of 1986, as
amended. Accordingly, no gain or loss will be recognized by holders of our
common stock or by us or Aradyme Utah as a result of the consummation of the
merger. Each former holder of our common stock will have the same tax basis in
Aradyme Utah common stock received pursuant to the merger as that stockholder
has in our common stock held at the Effective Date of the merger. Each
stockholder's holding period with respect to such Aradyme Utah common stock will
include the period during which such stockholder held our corresponding common
stock, provided the latter is held as a capital asset at the time of
consummation of the merger. The foregoing is only a summary of the federal
income tax consequences and is not tax advice. No ruling from the Internal
Revenue Service and no opinion of counsel with respect to the tax consequences
of the merger have been or will be obtained by us. Stockholders should consult
their own tax advisers regarding the tax consequences of the merger.
Possible Negative Consequences of the Domicile Change
Notwithstanding the belief of our board of directors as to the
potential benefits to our stockholders of the Domicile Change and the Merger
Agreement, stockholders should realize that there may be negative consequences
of the Domicile Change and the Merger Agreement. In particular, Delaware courts
have developed considerable expertise in dealing with corporate issues with
respect to Delaware corporations and a substantial body of case law has
developed construing Delaware law and establishing public policies.
Significantly fewer corporations have chosen Utah for their domicile and, as a
result, Utah courts have not developed the same level of expertise and there is
a significantly smaller body of case law that has developed. Accordingly, there
will be more uncertainty about the application of Utah law to particular factual
circumstances.
Appraisal Rights
Because the proposed Domicile Change will be conducted through a merger
of a parent corporation (Aradyme Corporation) into its wholly-owned subsidiary
(Aradyme Utah), under Section 253 of the Delaware Code, our stockholders will
not have the right to appraisal rights under the Delaware Code or receive the
fair market value of their shares in cash.
Certain Significant Differences between the Corporation Laws of Utah and
Delaware
Although it is impractical to note all of the differences between the
corporation statutes of Utah and Delaware, the most significant differences in
the judgment of our management are summarized below. The summary is not intended
to be complete and reference should be made to the Utah Act and the Delaware
Code.
Appraisal Rights. Under Utah law, dissenting stockholders are entitled
to appraisal rights in connection with the lease, sale, exchange, transfer, or
other disposition of all or substantially all of the assets of a corporation and
in connection with certain amendments to the corporation's articles of
incorporation. With certain exceptions, stockholders of a Utah corporation being
merged into or consolidated with another corporation and stockholders of an
acquiring corporation are entitled to appraisal rights in any merger,
combination, or other transaction in which such stockholders are entitled to
voting rights. Under Delaware law, appraisal rights are available only in
connection with certain mergers or consolidations, unless otherwise provided in
the certificate of incorporation.
9
Dividends. Utah law prohibits the distribution of dividends if, after a
distribution is given effect, the corporation would not be able to pay its debts
as they become due in the usual course of business or if the corporation's total
assets would be less than the sum of its total liabilities plus the amount that
would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution. Like Utah, Delaware law prohibits the distribution of dividends if
the capital of the corporation shall have been diminished by depreciation in the
value of its property, or by losses or otherwise, to an amount less than the
aggregate amount of capital represented by the issued and outstanding stock of
all classes having a preference upon the distribution of assets. Neither we nor
Aradyme Utah has any current plans to pay dividends or make any other
distributions on our capital stock. Nevertheless, the difference between the
Utah Act and the Delaware Code with respect to amounts available for dividends
or other distributions could conceivably affect future dividends or other
distributions, if they are declared.
Right to Call Annual Meetings of Stockholders. Under Utah law, the
holders of at least 10% of the outstanding shares of a corporation have the
authority to call annual meetings of stockholders. Delaware law does not require
that stockholders be given the right to call annual meetings. Our Delaware
Bylaws provide, however, that the holders of at least 20% of our outstanding
shares have the authority to call special meetings of stockholders.
Provisions Affecting Business Combinations/Corporate Control. Delaware
has enacted a business combination statute that is contained in Section 203 of
the Delaware Code. Utah has no comparable statute. Delaware Section 203 provides
that any person that acquires 15% or more of a corporation's voting stock (an
"Interested Stockholder") may not engage in a wide range of "business
combinations" with the corporation for a period of three years unless certain
approvals are obtained from the board of directors or stockholders. A "business
combination" is defined to include: (i) mergers of a corporation and sales or
other dispositions of 10% or more of the assets of a corporation with or to an
Interested Stockholder; (ii) certain transactions resulting in the issuance or
transfer to the Interested Stockholder of any stock of the corporation or its
subsidiaries; (iii) certain transactions that would result in increasing the
proportionate share of the stock of the corporation or its subsidiaries owned by
the Interested Stockholder; and (iv) receipt by the Interested Stockholder of
the benefit (except proportionately as a stockholder) of any loans, advances,
guarantees, pledges, or other financial benefits.
These restrictions do not apply under certain circumstances if the
corporation's certificate of incorporation or bylaws contain a provision
expressly electing not to be governed by Section 203. Our Delaware Certificate
of Incorporation and Delaware Bylaws do not contain any provision electing not
to be governed by Section 203 of the Delaware Code. Management is not aware of
any attempt to acquire our company by a third party and does not have any
current plans to propose any changes to the charter documents or corporate
structure of Aradyme Utah that would have an anti-takeover purpose or effect.
The Utah Act includes provisions disallowing the exercise of voting
rights with respect to "control shares" of an "issuing corporation" held by an
"acquiring person," unless such voting rights are conferred by a majority vote
of the disinterested stockholders. "Control shares" are the voting shares of an
issuing corporation acquired in connection with the acquisition of a
"controlling interest." "Controlling interest" is defined in terms of threshold
levels of voting share ownership, which thresholds, whenever each may be
crossed, trigger application of the voting bar with respect to the shares newly
acquired. Aradyme Utah has specifically elected, however, that the provisions of
Utah's Control Share Acquisition Act shall not be applicable to any control
share acquisition of the securities of Aradyme Utah, as permitted by the
statute. Delaware does not have a similar control shares statute.
Indemnification of Officers and Directors and Advancement of Expenses.
Utah and Delaware have similar provisions regarding indemnification by a
corporation of its officers, directors, employees, and agents for claims against
such persons as a result of their position. Our Delaware Certificate does, and
our Utah Articles will, indemnify our directors and executive officers to the
full extent permitted by the applicable law.
10
Limitation on Personal Liability of Directors. Delaware corporations
are permitted to adopt charter provisions limiting, or even eliminating, the
liability of a director of a company and its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that such liability does
not arise from certain proscribed conduct, including breach of the duty of
loyalty, acts or omissions not in good faith or that involve intentional
misconduct, or a knowing violation of law or liability to the corporation based
on unlawful dividends or distributions or improper personal benefit. The Utah
Act provision permitting the adoption of provisions in the articles of
incorporation limiting personal liability is similar to Delaware's, but differs
in one major respect. While the Delaware provision does not permit limitation of
liability for breach of duty of loyalty, the Utah counterpart does not contain
this exception. Our Delaware Certificate does, and our Utah Articles will, limit
the liability of our directors to the fullest extent permitted by law.
Material Differences between Charter and Bylaws of the Company and Aradyme
Utah
Upon completion of the Merger, the Utah Articles of Incorporation and
the Utah Bylaws will become the charter and bylaws of the surviving corporation.
In the judgment of our management, the following are the material differences
between the Delaware Certificate and the Utah Articles, and between the Delaware
and Utah Bylaws.
o The Delaware Certificate includes provisions reflecting
Delaware law that allow a Delaware court of equitable
jurisdiction to order a meeting of the stockholders upon the
proposal of any compromise between the corporation and its
creditors or between the corporation and its stockholders.
Such a meeting would be for the purpose of obtaining a
three-fourths vote of the creditors or stockholders, as
applicable, approving the proposed transaction, which would
then bind all creditors or stockholders, as applicable.
Neither the Utah Articles nor Utah law has such a provision.
o While the Delaware Bylaws allow a special meeting of the
stockholders to be called by 20% of the stockholders, the Utah
Bylaws require only 10% of the stockholders to call a special
meeting.
o The Utah Bylaws provide that business may be brought before
the stockholders at the annual meeting by a stockholder only
in compliance with certain notice procedures, which require
written notice describing the business to be brought before
the stockholders at least 30 days before the annual meeting or
within 10 days after the notice of the annual meeting is
mailed, if such notice is mailed fewer than 40 days before the
date of the annual meeting. The Delaware Bylaws include no
such limitation.
o The Utah Bylaws provide that a stockholder may nominate a
candidate for election to the board of directors only upon
providing written notice and certain information concerning
the nominee at least 90 days in advance of any annual meeting
and no later than seven days after notice of a special meeting
is mailed to the stockholders. The Delaware Bylaws do not
address this subject.
o The Delaware Bylaws require only one or more directors, while
the Utah Bylaws require that we have three or more directors.
o The Delaware Bylaws provide that if a director is removed from
office by the stockholders, the vacancy may be filled only by
the stockholders. The Utah Bylaws would permit such a vacancy
to be filled by the board of directors.
The Utah Articles of Incorporation and Utah Bylaws are attached hereto
at Appendices B and C, respectively. Copies of the Delaware Certificate of
Incorporation and Delaware Bylaws are available for inspection by stockholders
upon request to our corporate secretary.
Recommendation of the Board of Directors
The board of directors recommends a vote "FOR" the Domicile Change and
approval of the Merger Agreement. It is intended that, in the absence of
contrary specifications, votes will be cast pursuant to the enclosed proxies for
the Domicile Change and approval of the Merger Agreement.
11
Vote Required
The above proposal will be approved if the number of votes cast for
such proposal constitutes at least a majority of our issued and outstanding
shares of common stock. Abstentions and broker non-votes will have the same
legal effect as a vote against the proposal.
PROPOSAL 3: AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE CAPITALIZATION
General
The board of directors has unanimously approved an amendment to our
Certificate of Incorporation to increase the number of authorized shares of
common stock to 150,000,000 shares, with no change to the par value.
The board of directors believes that this amendment is in our best
interests. In December 2005, we entered into a funding agreement with Eagle Rock
Capital, LLC, which is an affiliate of Merwin Rasmussen, our officer and
director. That agreement was revised and restated on April 17, 2006. Based on
funding already provided under the agreement, we will be required to issue and
reserve for issuance more shares of common stock than are currently authorized.
Accordingly, our board of directors has approved the increase to 150,000,000
shares of common stock in order to protect our ability to fully perform under
the agreement with Eagle Rock Capital, and to provide flexibility to raise
additional funds in the future, which we believe is likely to be necessary.
As of October 17, 2006, we had 34,442,046 shares issued and outstanding
and 22,189,125 shares reserved for issuance upon the exercise of outstanding
options and warrants, 10,834,375 of which were held by Eagle Rock Capital, LLC,
or its affiliates. If this amendment is approved and our authorized
capitalization is increased to 150,000,000 shares of common stock and Eagle Rock
Capital purchases all shares and warrants under the revised and restated
purchase agreement, we would then have 57,923,296 shares issued and outstanding
and 13,304,750 reserved for issuance upon the exercise of outstanding options
and warrants. That would leave us with 78,771,954 shares of common stock
remaining available for issuance.
Aside from the revised and restated agreement with Eagle Rock Capital,
we currently have no plans, proposals, or arrangements, written or otherwise, to
issue any of the additional authorized shares of common stock that will exist if
this proposal is approved. However, we continue to require additional working
capital to fund our operations and expect that we will continue to rely on
proceeds from the sale of securities or borrowings to obtain such funding.
The increase in our authorized shares of common stock, if approved,
might have anti-takeover effects insofar as the additional shares could be used
by management to resist or frustrate a third-party transaction providing an
above-market premium that is favored by a majority of our independent
stockholders. We do not have any mechanisms in our Delaware Certificate and
Bylaws, in the proposed Utah Articles and Bylaws, or otherwise that are
considered anti-takeover mechanisms, and we currently have no plans or proposals
to adopt other provisions or enter into other arrangements that may have
material anti-takeover consequences.
Recommendation of the Board of Directors
The board of directors recommends a vote "FOR" the adoption of the
proposed amendment to our Certificate of Incorporation. It is intended that, in
the absence of contrary specifications, votes will be cast pursuant to the
enclosed proxies for the adoption of the proposed amendment to our Certificate
of Incorporation.
Vote Required
The above proposal will be approved if the number of votes cast for
such proposal constitutes at least a majority of our issued and outstanding
shares of common stock. Abstentions and broker non-votes will have the same
legal effect as a vote against the proposal.
12
PROPOSAL 4. APPROVAL OF THE 2006 LONG-TERM INCENTIVE PLAN
On February 14, 2006, our board of directors adopted the 2006 Long-Term
Incentive Plan under which up to 3,000,000 shares of common stock may be issued.
A copy of the 2006 plan is attached hereto as Appendix D. The 2006 plan is to be
administered either by the board of directors or by the appropriate committee to
be appointed from time to time by such board of directors. Awards granted under
the 2006 plan may be incentive stock options ("ISOs") (as defined in the
Internal Revenue Code), appreciation rights, options that do not qualify as
ISOs, or stock bonus awards that are awarded to employees, officers, and
directors who, in the opinion of the board or the committee, have contributed or
are expected to contribute materially to our success. In addition, at the
discretion of the board of directors or the committee, options or bonus stock
may be granted to individuals who are not employees, officers or directors, but
contribute to our success.
The exercise price of options granted under the 2006 plan is to be
determined by the board of directors or the committee at the time of grant and,
in the case of ISOs, may not be less than 100% of the fair market value of such
capital stock on the date the option is granted (110% of the fair market value
in the case of 10% stockholders). Options granted under the 2006 plan must
expire not later than 10 years after the date of grant (five years in the case
of ISOs granted to 10% stockholders). The option price may be paid by cash or,
at the discretion of our board of directors or committee, by delivery of shares
of our common stock already owned by the optionee (valued at their fair market
value at the date of exercise), a fully-secured promissory note, or a
combination thereof.
Options and stock purchase rights granted under the 2006 plan are
nontransferable other than by will or by the laws of descent or distribution and
may be exercised during the optionee's lifetime only by the optionee, or by an
optionee's family member who has acquired the option or stock purchase right
through a gift or a transfer for value pursuant to a domestic relations order in
settlement of marital property rights, or a transfer to an entity in which more
than 50% of the voting interests are owned by an optionee's family members or
the optionee in exchange for an interest in that entity. In the case of an ISO,
however, the options are nontransferable other than by will or by the laws of
descent or distribution and may only be exercised by the optionee during the
lifetime of the optionee or by the optionee's executor, personal representative
(or person acting in a substantially similar capacity), or heir.
The board of directors or the committee may, from time to time, alter,
amend, suspend, or discontinue the 2006 plan with respect to any shares as to
which options or stock awards have not been granted. However, no such alteration
or amendment (unless approved by the stockholders) shall (a) increase (except
adjustment for an event of dilution) the maximum number of shares for which
options or stock awards may be granted under the 2006 plan either in the
aggregate or to any eligible employee; (b) reduce (except adjustment for an
event of dilution) the minimum option prices that may be established under the
2006 plan; (c) extend the period or periods during which options may be granted
or exercised; (d) materially modify the requirements as to eligibility for
participation in the 2006 plan; (e) change the provisions relating to events of
dilution; or (f) materially increase the benefits accruing to the eligible
participants under the 2006 plan.
All of our employees, officers, and directors are eligible to
participate under the 2006 plan. A maximum of 3,000,000 shares are available for
grant under the 2006 plan. The identification of individuals entitled to receive
awards, the terms of the awards, and the number of shares subject to individual
awards are determined by the board of directors or the committee, in its sole
discretion; provided, however, that in no event may the aggregate fair market
value of shares for which an ISO is first exercisable in any calendar year by
any eligible employee exceed $100,000.
Certain Tax Matters
The following summary of the major United States income tax
consequences of participation in the 2006 plan is based on the pertinent
provisions of the Internal Revenue Code, the applicable regulations promulgated
by the Treasury Department under the Internal Revenue Code (the "Regulations"),
and judicial and administrative interpretations of the Internal Revenue Code and
Regulations. The Internal Revenue Code, the Regulations, and the interpretations
thereof are subject to change and such changes may be given retroactive effect.
Options to be granted under the 2006 plan do not qualify under Section 401(a) of
the Internal Revenue Code as qualified pension, profit sharing, or stock bonus
plans.
13
Nonqualified Stock Options
Under the current provisions of the Internal Revenue Code, the
following consequences will result from the grant and exercise of the options
that are not granted and issued in accordance with the requirements of Section
422 of the Internal Revenue Code and, therefore, do not qualify as ISOs under
the Internal Revenue Code (assuming there is not an active trading market for
our options):
(1) Income will not be recognized by the optionee at the time
of the grant of the options, except that in the event options are
granted with an exercise price lower than the then-current fair market
value of the shares, the difference between the exercise price and the
then-current fair market value will be treated as deferred compensation
income recognized as of the date the options are granted.
(2) If income is not recognized at the time of the grant of
the options pursuant to clause (1) above, on exercise of the options,
in whole or in part, the optionee will realize ordinary income in an
amount equal to the excess of the fair market value of the option
shares acquired at the time of exercise over the option exercise price.
(3) Upon the sale of any option shares acquired pursuant to
the exercise of the options, the optionee will realize short-term or
long-term capital gain or loss, as the case may be, in an amount equal
to the difference between the amount realized on such sale and the
optionee's tax basis in the option shares (as described below).
(4) We will be entitled to record a compensation expense for
federal income taxation purposes in an amount equal to the ordinary
income recognized by the optionee as set forth in clauses (1) and (2)
above.
If payment of the exercise price is made entirely in cash, the tax
basis of the option shares will be equal to the option exercise price paid, if
any, plus the ordinary income recognized by the optionee, which sum should equal
the fair market value of the option shares acquired on the date of exercise. The
holding period will begin on the day after the tax basis of the shares is so
determined.
The ordinary income received by the optionee on the exercise of a
nonqualified option is considered compensation from us. As with other forms of
compensation, withholding taxes, FICA, and Medicare payments will be owed with
respect to the exercise of options by employees. We may accept payment of such
withholding taxes, FICA, and Medicare payments in one or more of the following
ways: (a) the optionee delivering shares of common stock with a fair market
value equal to such requirements; (b) our withholding option shares subject to
the option, with a fair market value equal to such requirements; or (c) our
withholding from payroll or other amounts owed to the holder. We may, in our
sole discretion, discuss with the securities broker-dealer through which an
optionee subject to withholding sells stock issued on the exercise of options
the use of a portion of the sales proceeds to pay the withholding obligation, so
that such payment is not an advance out-of-pocket expense to the optionee.
Incentive Stock Options
Under the current provisions of the Internal Revenue Code, if shares of
common stock are issued to the original holder of an ISO granted and exercised
in accordance with the 2006 plan, then:
(1) no income will be realized by such holder at the time of
the grant of the option or on the transfer of such shares of common
stock to the holder pursuant to the exercise of the option;
(2) the excess of the fair market value of such shares of
common stock at the time of exercise over the option exercise price
will be treated as an "item of tax preference" to such holder under the
alternative minimum tax provisions of the Internal Revenue Code, and
therefore, may be subject to tax at the minimum tax rate under certain
conditions;
14
(3) no compensation deduction will be allowed to us for
federal income tax purposes in connection with the grant or exercise of
such option; and
(4) upon a sale or exchange of shares of common stock acquired
on exercise of the option after the later of (a) one year after the
date of transfer of shares of common stock to the original holder, or
(b) two years after the date of the grant of the option, any amount
realized by such holder in excess of the option exercise price will be
taxed to the holder as a long-term capital gain, and any loss sustained
will be a long-term capital loss.
If such shares are disposed of before the expiration of the holding
periods described in clause (4) above, then (i) the holder will realize ordinary
taxable income in the year of disposition in an amount equal to the difference
between the fair market value of the stock as of the date of exercise of the
option determined under the rules of the Internal Revenue Code and the exercise
price of the options; (ii) the holder will also realize capital gain or loss,
short-term or long-term, as the case may be, in an amount equal to the
difference between the amount realized by the holder on sale or exchange of the
shares and the option price paid by the holder increased by the amount of
ordinary income, if any, recognized by the holder on exercise of the option;
(iii) we will be entitled to a deduction in the amount of the compensation
(ordinary) income so realized by the holder; and (iv) the tax preference
otherwise arising on the exercise of the option would be inapplicable.
If an option is exercised by payment in common stock (to the extent
allowed), such exercise generally will not be considered a taxable disposition
of the previously-owned shares and, thus, no gain or loss will be recognized
with respect to such shares upon exercise. However, if the previously-owned
shares were acquired on the exercise of an incentive or other tax-qualified
stock option and the holding period requirement for those shares was not
satisfied at the time they were used to exercise the outstanding option or to
satisfy the withholding obligations, such use would constitute a disqualifying
disposition of such previously-owned shares resulting in the recognition of
ordinary income (but, under proposed Regulations, not any additional capital
gain) in the amount described above.
Stock Awards
Under the terms of the 2006 plan, stock awards may be granted as
determined by the board of directors or authorized committee. Such stock awards
may be subject to forfeiture under conditions imposed by the board of directors
or the committee. Recipients of stock awards will realize ordinary income at the
time of receipt of a stock award or, if such award is subject to forfeiture,
upon the lapse of any such forfeiture provisions. The ordinary income realized
by the recipient will be equal to the fair market value of the shares less the
amount, if any, paid in connection with the issuance (the board of directors or
the committee can require the payment of par value at the time of the grant). We
will realize a corresponding compensation deduction. The holder will have a
basis in the shares acquired equal to any amount paid on receipt plus the amount
of any ordinary income recognized by the holder. On sale of the shares, the
holder will have a capital gain or loss equal to the sales proceeds minus its
basis in the shares.
Restricted Stock Units
Restricted stock units may also be granted as determined by the board
of directors or authorized committee in the same manner as stock awards.
However, in the case of restricted stock units, the shares of stock will not be
issued until the satisfaction of such vesting conditions or other requirements,
conditions, or restrictions imposed by the board of directors or authorized
committee. A holder of a restricted stock unit generally will recognize no
income upon the grant of such award. Upon the issuance of the shares in
settlement of the award, holders will recognize ordinary income in the year of
receipt in an amount equal to the fair market value of the shares received as of
such date. The ordinary income generally is subject to withholding of income and
employment taxes. We will be entitled to a corresponding compensation deduction
equal to the amount of ordinary income recognized by the holder. As with stock
awards, the holder of a restricted stock unit will have a basis in the shares
acquired equal to any amount paid on receipt, if any, plus the amount of any
income or gain recognized by the holder. On the sale of the shares, the holder
will have a capital gain or loss equal to the sales proceeds less his or her
basis in the shares.
15
Recommendation of the Board of Directors
The board of directors recommends a vote "FOR" the adoption of the 2006
plan. It is intended that, in the absence of contrary specifications, votes will
be cast pursuant to the enclosed proxies for the adoption of the 2006 plan.
Vote Required
Adoption of the 2006 plan requires the approval of a majority of the
shares present, in person or represented by proxy, and voting at the Annual
Meeting. Abstentions and broker non-votes will not be counted, except for
determining the presence of a quorum as described in Introduction: Quorum
Requirement; Voting Requirement.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information respecting
beneficial ownership of our common stock as of October 17, 2006, to the extent
known to us, of each of our executive officers and directors, each person known
to us to be the beneficial owner of more than 5% of the outstanding shares of
any class of our stock, and all directors and officers as a group:
Name and Address of Person or Group Nature of Ownership Amount Percent(1)
----------------------------------- ------------------- ------ ----------
Principal Stockholders:
Merwin D. Rasmussen......................... Common Stock(2) 10,774,515 31.3%
5722 South 1300 West Options and Warrants(3) 25,431,250 42.5
Salt Lake City, UT 84123 -----------
36,205,765 60.5
Lynn Rob Ledbetter.......................... Common stock 4,068,992 11.8
4441 North Bedford Drive Warrants 300,000 0.9
Provo, UT 84604 -----------
4,368,992 12.6
James R. Spencer ........................... Common stock 1,383,979 4.0
558 West 1300 North Options 1,150,000 3.2
Orem, UT 84057 -----------
2,533,979 7.1
Kirk L. Tanner.............................. Common stock 1,366,979 4.0
916 East 25 South Options 1,050,000 3.0
Linden, UT 84042 -----------
2,416,979 6.8
Directors and Nominees:
James R. Spencer............................ ----------See above----------
Merwin D. Rasmussen......................... ----------See above----------
Jeffrey S. Bennion.......................... Common stock -- --
Options -- --
Executive Officers:
James R. Spencer............................ ----------See above----------
Merwin D. Rasmussen......................... ----------See above----------
Scott A. Mayfield Common stock 120,800 0.4
1255 N. Research Way Options 375,000 1.1
Orem, UT 84097 -----------
495,800 1.4
All Executive Officers, Directors, and
Nominees as a Group (4 persons):.......... Common stock(2) 12,279,294 35.7%
Options(3) 26,956,250 43.9
-----------
Total 39,235,544 63.9%
===========
- ------------
(1) Calculations of percentages of ownership for each person or group assume
the exercise of options held by that person or group to which the
percentage relates.
16
(2) 7,500,000 shares of common stock and 8,125,000 warrants in these totals are
owned by Eagle Rock Capital, LLC, of which Mr. Rasmussen is President and
Chief Executive Officer; and 2,299,515 shares of common stock in this total
are owned by Enviro Fresh, Inc., of which Mr. Rasmussen is president and
sole stockholder.
(3) Includes 6,537,500 shares of common stock and warrants to purchase an
additional 17,018,750 shares of common stock that Eagle Rock Capital, LLC is
entitled to purchase under the Revised and Restated Stock Purchase Agreement
effective December 12, 2005. Eagle Rock's right to purchase these shares and
purchase and exercise these warrants is subject to our having sufficient
unissued and unreserved common stock available, which is not the case with
our current capitalization of 50,000,000 shares of common stock, and is one
of the reasons for the submission of Proposal 3 to our stockholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors and executive officers, and persons that own more than
10% of a registered class of our equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of our equity securities. Officers, directors, and greater than 10%
stockholders are required to furnish us with copies of all Section 16(a) forms
they file.
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to us during or respecting our last fiscal year ended September 30,
2005, no person that, at any time during the most recent fiscal year, was a
director, officer, or beneficial owner of more than 10% of any class of our
equity securities, or any other person known to be subject to Section 16 of the
Exchange Act, failed to file, on a timely basis, reports required by Section
16(a) of the Exchange Act, except as follows: Merwin D. Rasmussen filed a report
on Form 4 for the acquisition of 5,000,000 shares of our common stock and
warrants to purchase 5,000,000 shares of common stock on January 27, 2006, that
was due on December 14, 2005, and filed a Form 4 for the acquisition of
2,500,000 shares of common stock and warrants to purchase 3,846,875 shares of
common stock on October 19, 2006, that was due April 20, 2006; and Lynn Rob
Ledbetter has failed to file the initial report on Form 3 that was due upon his
becoming a 10% stockholder and Form 4s for the acquisition of common stock
purchased in private transactions with other stockholders and on the open
market.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Unless otherwise indicated, the terms of the following transactions
between related parties were not determined as a result of arm's-length
negotiations.
Loans
On June 30, 2005, we borrowed $100,000 from one of our directors,
Merwin D. Rasmussen, and $100,000 from an affiliate of Mr. Rasmussen. The
balances of both loans, with accrued interest, were subsequently repaid in July
2005. Both loans were due on August 15, 2005, bore interest at the rate of 10%
per annum, and were secured by our accounts receivable.
On September 1, 2005, we borrowed $100,000 from an affiliate of Mr.
Rasmussen. The balance of the loan, with accrued interest, was due on October
15, 2005, bore interest at the rate of 10% per annum, and was secured by our
accounts receivable. The maturity date was subsequently extended to November 15,
2005. On December 12, 2005, as part of a Stock Purchase Agreement with Eagle
Rock Capital, LLC, which is another affiliate of Mr. Rasmussen, we agreed to
allow this loan to be converted to common stock, at the lender's discretion.
On November 16, 2005 and December 5, 2005, we borrowed $250,000 and
$120,000, respectively, from an affiliate of Mr. Rasmussen. The balances of the
loans, with accrued interest, were due upon the closing of a contemplated
purchase of common stock by Eagle Rock Capital, LLC, which is also an affiliate
of Mr. Rasmussen, bore interest at the rate of 8% per annum, and were secured by
our accounts receivable. The balances of both loans, with accrued interest, were
subsequently repaid in December 2005, upon closing of a purchase of common stock
by Eagle Rock Capital, LLC.
17
On June 28, 2006, and July 14, 2006, we borrowed $150,000 and $125,000,
respectively, from an affiliate of Mr. Rasmussen, who is one of our directors.
The balances of the loans, with accrued interest, are due within 30 days, but
the due dates have been extended for two additional 30-day periods. The notes
bear interest of 12% per annum, with two percentage points due for each 30-day
period they are outstanding. As an additional term of the loans, we agreed to
update and keep current a copy of our current technology, which is to be placed
in escrow and may be made available to Enviro Fresh, Inc., under certain
conditions pursuant to that Modification and Documentation of Obligations
Agreement dated September 29, 2003.
Common Stock
On December 12, 2005, we agreed to issue up to 15,000,000 shares of
common stock and warrants to purchase an additional 15,000,000 shares of common
stock (subject to certain adjustments) in a series of tranches to Eagle Rock
Capital, LLC, which is an affiliate of Mr. Rasmussen. That agreement was revised
and restated on April 17, 2006. In the initial tranche, Eagle Rock paid us
$1,000,000 for 5,000,000 shares of common stock and warrants to purchase an
additional 5,000,000 shares of common stock at an exercise price of $0.40 per
share. In succeeding tranches, the investor may purchase up to an additional
10,000,000 shares of common stock at $0.20 per share and warrants to purchase up
to an additional 13,750,000 shares of common stock with an exercise price of
$0.40 per share. On the date of the agreement, the closing sales price of our
common stock was $0.37 per share. On the date our agreement was revised and
restated, the closing price of our common stock was $0.28 per share.
The agreement obligates us to file a registration statement with the
Securities and Exchange Commission registering 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 agreement, and any other shares of our common stock
held by the Eagle Rock or its affiliates, including Mr. Rasmussen, as of the
agreement date. The agreement was revised and restated on April 17, 2006, to
require us to file the registration statement on or before the thirtieth day
after an amendment to our certificate of incorporation increasing our
capitalization from 50,000,000 shares of common stock to 100,000,000 shares of
common stock is effective.
Stock Grants
In November 2004, we issued 120,000 shares of stock to Scott Mayfield,
our chief financial officer, as payment for his services as a consultant before
becoming our chief financial officer.
Modification and Documentation of Obligations
Effective September 29, 2003, we entered into a Modification and
Documentation of Obligations agreement with Merwin D. Rasmussen, an officer,
director, and principal stockholder. Under that agreement, we granted to Mr.
Rasmussen's affiliate, Enviro Fresh, Inc., the right, exercisable at any time
between December 1, 2003, and five days after payment in full of the amount due
on a $200,000 line of credit advanced by Enviro Fresh, Inc., to convert all or
any part of the principal of and interest on the line of credit to common stock
at a conversion price of $0.14 per share, which was the market price for the
common stock on September 29, 2003. In addition, provided that Enviro Fresh,
Inc. converted all of the line of credit to common stock at any time on or
before May 1, 2007, and returned to us Mr. Rasmussen's option to purchase
1,000,000 shares of common stock at $0.416 per share or the option shares issued
on the exercise thereof, we would grant to Mr. Rasmussen the nonexclusive,
royalty-free right to use all of our intellectual property then-existing,
current versions of the source code, all then-current versions of all the
derivative works, and all then-current intellectual properties for his own use
and benefit and without the participation by us. In January 2004, Enviro Fresh,
Inc. converted all $242,400 of principal and accrued interest into 1,731,429
shares of common stock at the agreed conversion price. Mr. Rasmussen continues
to hold the options to purchase 1,000,000 shares of common stock.
18
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth, for the last three fiscal years, the
annual and long-term compensation earned by, awarded to, or paid to any person
who was our chief executive officer during the preceding fiscal year and each of
our other highest compensated executive officers earning more than $100,000
during the last fiscal year (the "Named Executive Officers"):
Long-term Compensation
------------------------------
Annual Compensation Awards Payouts
----------------------------------- ---------------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Other Under-
Annual Restricted lying All Other
Year Compen- Stock Options/ LTIP Compen-
Name and Principal Ended Salary sation Award(s) SARs Payouts sation
Position Sept. 30 ($) Bonus ($) ($) ($) (no.)(1) ($) ($)
--------------------------- ----------- ------------ ---------- --------- ----------- ---------- --------- -----------
James R. Spencer 2006 $180,000(2) -- -- -- -- -- $346
Chief Executive Officer 2005 180,000(3) -- -- -- 450,000 -- 346
2004 165,000 -- -- -- -- -- --
Scott A. Mayfield 2006 $120,000(4) -- -- -- -- -- $230
Chief Financial Officer 2005 120,000(5) -- -- -- 500,000 -- 230
2004 20,000 -- -- -- -- -- --
- --------------------
(1) Options granted pursuant to 2003 and 2004 Long-term Incentive Plans.
(2) Includes $7,500 paid in fiscal year 2006 that was accrued in fiscal year
2005, $142,500 that was paid in fiscal year 2006 for current salary, and
$37,500 that was accrued but unpaid in fiscal year 2006.
(3) Includes $7,500 paid in fiscal year 2005 that was accrued in fiscal year
2004, $172,500 that was paid in fiscal year 2005 for current salary, and
$7,500 that was accrued but unpaid in fiscal year 2005.
(4) Includes $5,000 paid in fiscal year 2006 that was accrued in fiscal year
2005, $95,000 that was paid in fiscal year 2006 for current salary, and
$25,000 that was accrued but unpaid in fiscal year 2006.
(5) Includes $5,000 paid in fiscal year 2005 that was accrued in fiscal year
2004, $115,000 that was paid in fiscal year 2005 for current salary, and
$5,000 that was accrued but unpaid in fiscal year 2005.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information respecting all individual
grants of options and stock appreciation rights ("SARs") made during the last
completed fiscal year to our Named Executive Officers:
Individual Grants
- -----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Percent of
Securities Total Options/
Underlying SARs Granted Exercise or
Options/SARs to Employees Base Price Expiration
Name Granted (#) in Fiscal Year ($/share) Date
- --------------------------------- ------------------ ----------------- -------------- -----------------------
James R. Spencer -- -- -- --
Scott A. Mayfield -- -- -- --
- --------------------
19
Aggregate Option/SAR Exercises in Last Fiscal Year and Year-End Option/SAR
Values
The following table sets forth information respecting the exercise of
options and SARs during the last completed fiscal year by the Named Executive
Officers and the fiscal year-end values of unexercised options and SARs:
(a) (b) (c) (d) (e)
Value
of
Unexercised
Shares Number of Securities In-the-Money
Acquired Underlying Unexercised Options/SARs
on Value Options/SARs at Fiscal at Fiscal Year-End ($)
Exercise Realized Year-End (#) Exercisable/
Name (#) ($) Exercisable/Unexercisable Unexercisable
- ------------------------------ ----------- ---------------- -------------------------------- -----------------------
James R. Spencer -- -- 1,150,000/-- --/--
Scott A. Mayfield -- -- 250,000/250,000 --/--
Directors' Compensation
Our two directors, who were also executive officers, did not receive
any additional compensation for their services as directors during the fiscal
year ended September 30, 2006, as noted above. We do not pay any separate fee to
members of our board of directors for their services as a director, but we do
reimburse normal business expenses incurred on our behalf.
Employment Agreements, Termination of Employment, and Change in Control
We have entered into written employment agreements with James R.
Spencer, Merwin D. Rasmussen, and Scott A. Mayfield. Under the terms of those
agreements, each executive officer may be terminated by us at any time with or
without cause. In the event that we terminate the employment of an executive
without cause, or if the executive terminates his employment with us upon a
change of our control or with cause, we will be obligated to pay the executive
severance in the amount of six months of the executive's base salary, and any
then-unvested options held by the executive will be automatically vested and
available for exercise.
Options and Warrants Granted to Officers, Directors, Employees and
Consultants
As of September 30, 2006, we had outstanding options and warrants to
purchase an aggregate of 20,582,875 shares that had been granted to our
officers, directors, employees, and consultants. Of such options, 3,626,875 are
unvested and contain vesting limitations contingent on continuing association
with us. These options and warrants are exercisable at prices ranging between
$0.18 and $0.80 per share. The grants of options to officers and directors were
not the result of arm's-length negotiations.
Equity Compensation Plans
Information about our equity compensation plans as of the end of our
most recent fiscal year is set forth as follows:
Number of securities
available for future
Number of securities to Weighted average exercise issuance under equity
be issued upon exercise of prices of outstanding compensation plans
outstanding options, options, warrants and (excluding securities
warrants and rights rights reflected in column (a))
Plan Category (a) (b) (c)
- ------------------------------- ---------------------------- --------------------------- ---------------------------
Equity compensation plans
approved by security
holders................ -- -- --
Equity compensation plans not
approved by security
holders................ 11,698,500 $0.385 1,259
---------- ------
Total.................. 11,698,500 $0.385 1,259
========== ======
20
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Selection of Auditors
The selection of our auditors will not be submitted to the stockholders
for their approval in the absence of a requirement to do so. It is anticipated
that representatives of HJ & Associates, LLC, will be present at the Annual
Meeting and will be provided the opportunity to make a statement, if they desire
to do so, and be available to respond to appropriate questions.
Audit Fees
The aggregate fees billed by HJ & Associates, LLC, for professional
services rendered for the reviews of the consolidated financial statements
included in our quarterly reports on Form 10-QSB for the fiscal year ended
September 30, 2006, are $9,494; however, this does not include the fees for the
audit of our September 30, 2006, financial statements, which is not yet
complete. The aggregate fees billed by HJ & Associates, LLC for professional
services rendered for the audit of our annual consolidated financial statements
for the fiscal year ended September 30, 2005, and for the reviews of the
consolidated financial statements included in our quarterly reports on Form
10-QSB for that fiscal year were $23,754. The aggregate fees billed by HJ &
Associates, LLC for professional services rendered for the audit of our annual
consolidated financial statements for the fiscal year ended September 30, 2004,
were $27,329.
Audit Related Fees
HJ & Associates, LLC did not bill us for any professional services that
were reasonably related to the performance of the audit or review of financial
statements for either the fiscal year ended September 30, 2006, or the fiscal
year ended September 30, 2005, that are not included under Audit Fees above.
Tax Fees
The aggregate fees billed by HJ & Associates, LLC, for professional
services rendered for tax compliance, tax advice, and tax planning were $2,062
in the fiscal year ended September 30, 2006. The aggregate fees billed by HJ &
Associates, LLC, for professional services rendered for tax compliance, tax
advice, and tax planning were $3,646 in the fiscal year ended September 30,
2005.
All Other Fees
HJ & Associates, LLC did not perform any services for us or charge any
fees other than the services described above under "Audit Fees" for either the
fiscal year ended September 30, 2006, or the fiscal year ended September 30,
2005.
OTHER MATTERS
Our management does not know of any business other than that referred
to herein that may be considered at the Annual Meeting. If any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the proxies held by them
in accordance with their best judgment.
In order to assure the presence of the necessary quorum and to vote on
the matters to come before the Annual Meeting, please indicate your choices on
the enclosed proxy and date, sign, and return it promptly in the envelope
provided. The signing of a proxy by no means prevents your attending the
meeting.
By Order of the Board of Directors
ARADYME CORPORATION
Orem, Utah
November 13, 2006 Merwin D. Rasmussen, Secretary
21
Appendix A
AGREEMENT AND
PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of February 22, 2006 (the
"Plan") is made and entered into by and between ARADYME CORPORATION, a Delaware
corporation ("Aradyme Delaware"), and ARADYME DEVELOPMENT CORPORATION, a Utah
corporation ("Aradyme Utah"). Aradyme Utah is sometimes referred to as the
"Surviving Corporation." Aradyme Utah and Aradyme Delaware are sometimes
hereinafter collectively referred to as the "Constituent Corporations."
IN CONSIDERATION of the mutual covenants and agreements herein
contained and for the purpose of setting forth the terms and conditions of said
merger and such other provisions as are deemed necessary or desirable, the
parties hereto have agreed and do hereby agree as follows.
Article I
Merger and Name of Surviving Corporation
On the effective date of the merger, Aradyme Utah and Aradyme Delaware
shall cease to exist separately and Aradyme Delaware shall be merged with and
into Aradyme Utah, which is hereby designated as the Surviving Corporation, the
name of which on and after the effective date of the merger shall be "Aradyme
Corporation."
Article II
Terms and Conditions of Merger
The terms and conditions of the merger are (in addition to those set
forth elsewhere in this Plan) as follows:
(a) On the effective date of the merger:
(1) Aradyme Delaware shall be merged into Aradyme
Utah to form a single corporation, and Aradyme Utah shall be
and is designated herein as the Surviving Corporation.
(2) The separate existence of Aradyme Delaware shall
cease.
(3) The Surviving Corporation shall have all the
rights, privileges, immunities, and powers, and shall be
subject to all duties and liabilities of a corporation
organized under the laws of the state of Utah.
(4) The Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, immunities, and
franchises of a public, as well as of a private, nature of
Aradyme Delaware, and all property, real, personal, and mixed,
and all debts due of whatever account, including subscriptions
to shares, and all other choses in action, and all and every
other interest of or belonging to or due to Aradyme Delaware
shall be taken and deemed to be transferred to and vested in
the Surviving Corporation without further act or deed. The
title to any real estate or any interest herein vested in
Aradyme Delaware shall not revert or be in any way impaired by
reason of the merger. The Surviving Corporation shall
thenceforth be responsible and liable for all the liabilities
and obligations of Aradyme Delaware. Any claim existing or
action or proceeding pending by or against Aradyme Delaware
may be prosecuted as if the merger had not taken place, or the
Surviving Corporation may be substituted in place of Aradyme
Delaware. Neither the rights of creditors nor any liens on the
property of Aradyme Delaware shall be impaired by the merger.
(b) On the effective date of the merger, the board of
directors of the Surviving corporation and the members thereof shall be
and consist of the members of the board of directors of Aradyme
Delaware immediately prior to the merger, to serve thereafter in
accordance with the bylaws of the Surviving Corporation and until their
respective successors shall have been duly elected and qualified in
accordance with such bylaws and the laws of the state of Utah.
(c) On the effective date of the merger, the officers of the
Surviving Corporation shall be and consist of the officers of Aradyme
Delaware immediately prior to the merger, such officers to serve
thereafter in accordance with the bylaws of the Surviving Corporation
and until their respective successors shall have been duly elected and
qualified in accordance with such bylaws and the laws of the state of
Utah.
(d) If, on the effective date of the merger, a vacancy shall
exist in the board of directors or in any of the offices of the
Surviving Corporation, such vacancy may be filled in the manner
provided in the bylaws of the Surviving Corporation and the laws of the
state of Utah.
Article III
Manner and Basis of Converting Shares
The manner and basis of converting the shares of Aradyme Delaware into
shares of Aradyme Utah and the mode of carrying the merger into effect are as
follows:
(a) Each share of common stock of Aradyme Delaware outstanding
on the effective date of the merger shall, without any action on the
part of the holder thereof, be converted into one fully-paid and
nonassessable share of common stock, par value $0.001 per share, of
Aradyme Utah (the "Exchanged Aradyme Utah Stock"), which shares of
Exchanged Aradyme Utah Stock shall thereupon be validly issued and
outstanding, fully paid, and nonassessable and shall not be liable to
any further call, nor shall the holder thereof by liable for any
further payments with respect thereto. After the effective date of the
merger, each holder of an outstanding certificate, which prior thereto
represented shares of the common stock of Aradyme Delaware, shall be
entitled on surrender thereto to the transfer and exchange agent to
receive in exchange therefor a certificate or certificates representing
the number of whole shares of Exchanged Aradyme Utah Stock into which
the shares of common stock of Aradyme Delaware surrendered shall have
been converted as aforesaid in such denominations as such holder may
request. Until so surrendered, each such outstanding certificate (which
prior to the effective date of the merger represented shares of the
common stock of Aradyme Delaware) shall for all purposes evidence the
ownership of the shares of Exchanged Aradyme Utah Stock into which such
shares shall have been converted; provided that dividends or other
distributions that are payable in respect of shares of Exchanged
Aradyme Utah Stock into which shares of Aradyme Delaware shall have
been converted shall be set aside by Aradyme Utah and shall not be paid
to holders of certificates representing such shares of common stock of
Aradyme Delaware until such certificates shall have been surrendered in
exchange for certificates representing Exchanged Aradyme Utah Stock. On
such surrender, the holder of such shares shall be entitled to receive
such dividends or other distributions without interest.
(b) All shares of Exchanged Aradyme Utah Stock into which
shares of the common stock of Aradyme Delaware shall have been
converted pursuant to this Article III shall be issued in full
satisfaction of all rights pertaining to the shares of Aradyme Delaware
stock.
2
(c) Each option, warrant, purchase right, unit, or other
security of Aradyme Delaware's immediately prior to the merger shall be
converted into and shall be an identical security of Aradyme Utah, and
the same number of shares of Aradyme Utah common stock shall be
reserved for purposes of the exercise of such options, warrants,
purchase rights, units, or other securities as is equal to the number
of shares of Aradyme Delaware common stock so reserved immediately
prior to the merger becoming effective.
(d) The shares of Aradyme Utah issued and outstanding
immediately prior to the merger becoming effective shall be canceled
and returned to the status of authorized but unissued.
Article IV
Articles of Incorporation and Bylaws
(a) The amended and restated articles of incorporation of
Aradyme Utah shall, on the merger becoming effective, constitute the
articles of incorporation of the Surviving Corporation unless and until
amended in the manner provided by law.
(b) The bylaws of Aradyme Utah shall, on the merger becoming
effective, be and constitute the bylaws of the Surviving Corporation
until amended in the manner provided by law.
Article V
Other Provisions with Respect to Merger
This Plan shall be submitted to the board of directors as provided by
the laws of the states of Delaware and Utah, as applicable. After the approval
or adoption of this Plan in accordance with the requirements of the laws of the
states of Delaware and Utah, as applicable, all required documents shall be
executed, acknowledged, certified, filed, and recorded in accordance with all
requirements of the states of Delaware and Utah, as applicable.
Article VI
Approval and Effective Date of the Merger;
Miscellaneous Matters
(a) In order to aid the parties in establishing a date certain
for effectiveness of the merger for accounting and other purposes, the
merger shall be deemed to have become effective on filing of articles
of merger, setting forth the information required by and executed and
certified in accordance with the laws of the state of Utah, with the
Utah Division of Corporations of the Department of Commerce, and such
office shall have issued a certified copy reflecting such filing.
(b) If, at any time, the Surviving Corporation shall deem or
be advised that any further grants, assignments, confirmations, or
assurances are necessary or desirable to vest, perfect, or confirm
title in the Surviving Corporation, of record or otherwise, to any
property of Aradyme Delaware acquired, to be acquired by, or as a
result of the merger, the officers and directors of Aradyme Delaware or
any of them shall be severally and fully authorized to execute and
deliver any and all such deeds, assignments, confirmations, and
assurances and to do all things necessary or proper so as to best
prove, confirm, and ratify title to such property in the Surviving
Corporation and otherwise carry out the purposes of the merger and the
terms of this Plan.
(c) For the convenience of the parties and to facilitate the
filing and recording of this Plan, any number of counterparts hereof
3
may be executed, and each such counterpart shall be deemed to be an
original instrument and all such counterparts together shall be
considered one instrument.
(d) This Plan cannot be altered or amended except pursuant to
an instrument in writing signed on behalf of the parties hereto.
IN WITNESS WHEREOF, each Constituent Corporation has caused this Plan
to be executed, all as of the date first above written.
ARADYME CORPORATION
a Delaware corporation
Attest:
By:
- ------------------------------------- ------------------------------
Merwin D. Rasmussen, Secretary James R. Spencer, President
ARADYME DEVELOPMENT CORPORATION
a Utah corporation
Attest:
By:
- ------------------------------------- ------------------------------
Merwin D. Rasmussen, Secretary James R. Spencer, President
4
Certificate of the Secretary of Aradyme Corporation
I, Merwin D. Rasmussen, Secretary of Aradyme Corporation, a Delaware
corporation ("Aradyme Delaware"), hereby certify in accordance with the Delaware
General Corporation Law of the state of Delaware that the Agreement and Plan of
Merger to which this certificate is attached, after having been first duly
approved and adopted by Aradyme Delaware and Aradyme Development Corporation, a
Utah corporation, was duly approved and adopted pursuant to Section 253 of the
Delaware General Corporation Law by the vote of holders of a majority of all of
the outstanding stock of Aradyme Delaware, and that thereby the Agreement and
Plan of Merger was duly adopted as the act of the stockholders of said
corporation and is the duly adopted agreement and act of said corporation.
-------------------------------
Merwin D. Rasmussen, Secretary
5
Execution and Acknowledgement
The foregoing Agreement and Plan of Merger, having been approved by the
board of directors of each Constituent Corporation, having been adopted by the
stockholders of Aradyme Corporation (Delaware) in accordance with the Delaware
General Corporation Law, we, the president and secretary of Aradyme Corporation
(Delaware) and the president and secretary of Aradyme Development Corporation
(Utah), do hereby execute this Agreement and Plan of Merger this _____ day of
_________________________, 2006, declaring and certifying that this is our act
and deed and the facts herein stated are true.
ARADYME CORPORATION
a Delaware corporation
Attest:
By:
- ----------------------------------------- -----------------------------
Merwin D. Rasmussen, Secretary James R. Spencer, President
STATE OF UTAH )
: ss.
COUNTY OF UTAH )
I, the undersigned notary public, hereby certify that on the ____ day
of ____________________, 2006, personally appeared before me, James R. Spencer
and Merwin D. Rasmussen, the president and secretary, respectively, of Aradyme
Corporation, a Delaware corporation, who being by me first duly sworn, severally
declared that they are the persons who signed the foregoing document as
president and secretary of Aradyme Corporation, a Delaware corporation, and that
the statements therein contained are true.
---------------------------------
NOTARY PUBLIC
ARADYME DEVELOPMENT CORPORATION
a Utah corporation
Attest:
By:
- ------------------------------------ ------------------------------
Merwin D. Rasmussen, Secretary James R. Spencer, President
STATE OF UTAH )
: ss.
COUNTY OF UTAH )
I, the undersigned notary public, hereby certify that on the ____ day
of _________________, 2006, personally appeared before me, James R. Spencer and
Merwin D. Rasmussen, the president and secretary, respectively, of Aradyme
Development Corporation, a Utah corporation, who being by me first duly sworn,
severally declared that they are the persons who signed the foregoing document
as president and secretary of Aradyme Development Corporation, a Utah
corporation, and that the statements therein contained are true.
---------------------------------
NOTARY PUBLIC
6
Appendix B
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF ARADYME DEVELOPMENT CORPORATION
Pursuant to Utah Code Ann. Sections 16-10a-1003, 16-10a-1006, and
16-10a-1007, Aradyme Development Corporation, a Utah corporation, hereinafter
referred to as the "Corporation," hereby adopts the following Amended and
Restated Articles of Incorporation, and certifies that:
1. The name of the Corporation is Aradyme Development Corporation.
2. Article III shall be amended to read as follows:
Article III
Authorized Shares
The Corporation shall have the authority to issue
51,000,000 shares, consisting of 50,000,000 shares of common
stock, par value of $0.001, and 1,000,000 shares of preferred
stock, par value of $0.001. The common stock, in the absence
of a designation of a separate series by the board of
directors as hereinafter provided, shall have unlimited voting
rights and is entitled to receive the net assets of the
Corporation upon dissolution. The board of directors of this
Corporation is hereby expressly granted authority, without
stockholder action, and within the limits set forth in the
Utah Revised Business Corporation Act, to:
(a) designate, in whole or in part, the
preferences, limitations, and relative rights of any
class of shares before the issuance of any shares of
that class;
(b) create one or more series within a class
of shares, fix the number of shares of each such
series, and designate, in whole or part, the
preferences, limitations, and relative rights of the
series, all before the issuance of any shares of that
series;
(c) alter or revoke the preferences,
limitations, and relative rights granted to or
imposed upon any wholly-unissued class of shares or
any wholly-unissued series of any class of shares; or
(d) increase or decrease the number of
shares constituting any series, the number of shares
of which was originally fixed by the board of
directors, either before or after the issuance of
shares of the series; provided that, the number may
not be decreased below the number of shares of the
series then outstanding, or increased above the total
number of authorized shares of the applicable class
of shares available for designation as a part of the
series.
The allocation between the classes, or among the series of
each class, of unlimited voting rights and the right to
receive the net assets of the Corporation upon dissolution
shall be as designated by the board of directors. Shares of
any class of stock may be issued, without stockholder action,
from time to time, in one or more series as may from time to
time be determined by the board of directors.
3. Previous Article V, entitled "Limitation on Liability," has been
renumbered as Article VI, and a new Article V, entitled "Board of Directors,"
has been included, which reads as follows:
Article V
Board of Directors
The business and affairs of the Corporation shall be
managed and controlled by or under the direction of a board of
directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not
by law or by these Amended and Restated Articles of
Incorporation directed or required to be exercised or done by
the stockholders of the Corporation. Election of directors at
an annual or special meeting of stockholders need not be by
written ballot unless the bylaws of the Corporation shall
otherwise provide. The number of directors of the Corporation,
which shall constitute the whole board of directors, shall be
such as from time to time fixed by or in the manner provided
in the bylaws.
4. Previous Article VI, entitled "Indemnification," has been renumbered
as Article VII.
5. A new Article VIII, entitled "Transactions with Officers and
Directors," has been included, which reads as follows:
Article VIII
Transactions with Officers and Directors
No contract or other transaction between the
Corporation and one or more of its directors or officers, or
between the Corporation and any corporation, firm, or
association in which one or more of its directors or officers
are directors or officers or are financial interested, is
either void or voidable solely for this reason or solely
because any such director or officer is present at the meeting
of the board of directors or a committee thereof that
authorizes or approves the contract or transaction, or because
the vote or votes of common or interested directors are
counted for such purpose, if the circumstances specified in
any of the following paragraphs exist:
(a) the fact of the common directorship or
financial interest is disclosed or known to the board
of directors or committee and noted in the minutes,
and the board or committee authorizes, approves, or
ratifies the contract or transaction in good faith by
a vote sufficient for the purpose without counting
the vote or votes of such common or interested
director or directors;
(b) the fact of the common directorship or
financial interest is disclosed or known to the
stockholders, and they approve or ratify the contract
or transaction in good faith by a majority vote or
written consent of stockholders holding a majority of
the shares entitled to vote; the votes of the common
or interested directors or officers shall be counted
in any such vote of stockholders; or
2
(c) the contract or transaction is fair as
to the Corporation at the time it is authorized or
approved.
6. A new Article IX, entitled "Adoption or Amendment of Bylaws," has
been included, which reads as follows:
Article IX
Adoption or Amendment of Bylaws
Except as otherwise provided herein, the power to
alter, amend, or repeal the bylaws or adopt new bylaws shall
be vested in the board of directors, but the stockholders of
the Corporation may also alter, amend, or repeal the bylaws or
adopt new bylaws. The bylaws may contain any provisions for
the regulation or management of the affairs of the Corporation
not inconsistent with the laws of the state of Utah now or
hereafter existing.
7. A new Article X, entitled "Amendments," has been included, which
reads as follows:
Article X
Amendments
The Corporation reserves the right to amend, alter,
change, or repeal all or any portion of the provisions
contained in these Articles of Incorporation from time to time
in accordance with the laws of the state of Utah, and all
rights conferred on stockholders herein are granted subject to
this reservation.
8. Previous Article VII, entitled "Registered Office and Registered
Agent," has been renumbered as Article XI.
9. Previous Article VIII, entitled "Incorporator," has been deleted.
10. The text of the Amended and Restated Articles of Incorporation is
amended and restated to read as set forth in Appendix A attached hereto.
11. These Amended and Restated Articles of Incorporation were duly
adopted in accordance with Utah Code Ann. Section 16-10a-1003, and restate,
integrate, and further amend the provisions of the Corporation's articles of
incorporation.
12. The president and secretary of the Corporation do hereby certify
that on February 14, 2006, the foregoing Amended and Restated Articles of
Incorporation of Aradyme Development Corporation were authorized and approved,
pursuant to Utah Code Ann. Section 16-10a-1003, by the board of directors and
the sole stockholder of the one issued and outstanding share of common stock of
the Corporation.
3
The undersigned affirm and acknowledge, under penalties of perjury,
that the foregoing instrument is their act and deed and that the facts stated
herein are true.
DATED this 14th day of February, 2006.
/s/ James R. Spencer /s/ Merwin D. Rasmussen
- ------------------------------------ ----------------------------------
James R. Spencer, President Merwin D. Rasmussen, Secretary
STATE OF UTAH )
: ss.
COUNTY OF UTAH )
On this 14th day of February, 2006, personally appeared before me, the
undersigned, a notary public, James R. Spencer and Merwin D. Rasmussen, who
being by me first duly sworn, declared that they are the president and
secretary, respectively, of the above named Corporation, acknowledged that they
signed the foregoing Amended and Restated Articles of Incorporation, and
verified that the statements contained therein are true.
/s/ Martina Walker
----------------------------------
Notary Public
4
Appendix A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ARADYME DEVELOPMENT CORPORATION
These Amended and Restated Articles of Incorporation of Aradyme
Development Corporation (hereinafter referred to as the "Corporation"), have
been duly adopted in accordance with Utah Code Ann. Section 16-10a-1003.
Article I
Name
The name of the Corporation shall be Aradyme Development Corporation.
Article II
Purpose
The Corporation is organized for the following purposes:
(a) to engage in the design, development, production and
marketing of computer software and systems; and
(b) to engage in any lawful purpose or purposes for which a
corporation may be organized under the Utah Revised Business
Corporation Act, as amended.
Article III
Authorized Shares
The Corporation shall have the authority to issue 51,000,000 shares,
consisting of 50,000,000 shares of common stock, par value of $0.001, and
1,000,000 shares of preferred stock, par value of $0.001. The common stock, in
the absence of a designation of a separate series by the board of directors as
hereinafter provided, shall have unlimited voting rights and is entitled to
receive the net assets of the Corporation upon dissolution. The board of
directors of this Corporation is hereby expressly granted authority, without
stockholder action, and within the limits set forth in the Utah Revised Business
Corporation Act, to:
(a) designate, in whole or in part, the preferences,
limitations and relative rights of any class of shares before the
issuance of any shares of that class;
(b) create one or more series within a class of shares, fix
the number of shares of each such series, and designate, in whole or
part, the preferences, limitations and relative rights of the series,
all before the issuance of any shares of that series;
1
(c) alter or revoke the preferences, limitations and relative
rights granted to or imposed upon any wholly-unissued class of shares
or any wholly-unissued series of any class of shares; or
(d) increase or decrease the number of shares constituting any
series, the number of shares of which was originally fixed by the board
of directors, either before or after the issuance of shares of the
series; provided that, the number may not be decreased below the number
of shares of the series then outstanding, or increased above the total
number of authorized shares of the applicable class of shares available
for designation as a part of the series.
The allocation between the classes, or among the series of each class, of
unlimited voting rights and the right to receive the net assets of the
Corporation upon dissolution shall be as designated by the board of directors.
Shares of any class of stock may be issued, without stockholder action, from
time to time, in one or more series as may from time to time be determined by
the board of directors.
Article IV
Control Share Acquisition
The provisions of the Control Share Acquisitions Act, Utah Code Ann.
Section 61-6-1 et seq., shall not be applicable to control share acquisition of
the securities of the Corporation. This election is made in accordance with the
provisions of Utah Code Ann. Section 61-6-1 et seq.
Article V
Board of Directors
The business and affairs of the Corporation shall be managed and
controlled by or under the direction of a board of directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by law or by these Amended and Restated Articles of Incorporation directed
or required to be exercised or done by the stockholders of the Corporation.
Election of directors at an annual or special meting of stockholders need not be
by written ballot unless the bylaws of the Corporation shall otherwise provide.
The number of directors of the Corporation, which shall constitute the whole
board of directors, shall be such as from time to time fixed by or in the manner
provided in the bylaws.
Article VI
Limitation on Liability
To the fullest extent permitted by the Utah Revised Business
Corporation Act or any other applicable law as now in effect or as it may
hereafter be amended, a director of the Corporation shall have no personal
liability to the Corporation or its stockholders for monetary damages for any
action taken or any failure to take any action as a director.
Article VII
Indemnification of Officers, Directors and Others
To the fullest extent permitted by the Utah Revised Business
Corporation Act or any other applicable law as now in effect or as it may
hereafter be amended, the Corporation shall indemnify directors as set forth in
the bylaws. The Corporation may indemnify officers, employees, fiduciaries, and
agents to the extent provided for in the bylaws or authorized by the board of
directors.
2
Article VIII
Transactions with Officers and Directors
No contract or other transaction between the Corporation and one or
more of its directors or officers, or between the Corporation and any
corporation, firm, or association in which one or more of its directors or
officers are directors or officers or are financial interested, is either void
or voidable solely for this reason or solely because any such director or
officer is present at the meeting of the board of directors or a committee
thereof that authorizes or approves the contract or transaction, or because the
vote or votes of common or interested directors are counted for such purpose, if
the circumstances specified in any of the following paragraphs exist:
(a) the fact of the common directorship or financial interest
is disclosed or known to the board of directors or committee and noted
in the minutes, and the board or committee authorizes, approves, or
ratifies the contract or transaction in good faith by a vote sufficient
for the purpose without counting the vote or votes of such common or
interested director or directors;
(b) the fact of the common directorship or financial interest
is disclosed or known to the stockholders, and they approve or ratify
the contract or transaction in good faith by a majority vote or written
consent of stockholders holding a majority of the shares entitled to
vote; the votes of the common or interested directors or officers shall
be counted in any such vote of stockholders; or
(c) the contract or transaction is fair as to the Corporation
at the time it is authorized or approved.
Article IX
Adoption or Amendment of Bylaws
Except as otherwise provided herein, the power to alter, amend, or
repeal the bylaws or adopt new bylaws shall be vested in the board of directors,
but the stockholders of the Corporation may also alter, amend, or repeal the
bylaws or adopt new bylaws. The bylaws may contain any provisions for the
regulation or management of the affairs of the Corporation not inconsistent with
the laws of the state of Utah now or hereafter existing.
Article X
Amendments
The Corporation reserves the right to amend, alter, change, or repeal
all or any portion of the provisions contained in these Articles of
Incorporation from time to time in accordance with the laws of the state of
Utah, and all rights conferred on stockholders herein are granted subject to
this reservation.
3
Article XI
Registered Office and Registered Agent
The address of the Corporation's registered office and the name of the
registered agent at that address in the state of Utah are:
James R. Spencer
1255 North Research Way, Building Q3500
Orem, Utah 84097
Either the registered office or the registered agent may be changed in the
manner provided for by law.
The undersigned affirms and acknowledges, under penalties of perjury,
that the foregoing instrument is my act and deed and that the facts stated
herein are true.
DATED this 14th day of February, 2006.
/s/ James R. Spencer /s/ Merwin D. Rasmussen
- -------------------------------- ------------------------------------
James R. Spencer, President Merwin D. Rasmussen, Secretary
4
Appendix C
BYLAWS
OF
ARADYME DEVELOPMENT CORPORATION
A UTAH CORPORATION
Adopted February 14, 2006
TABLE OF CONTENTS
ARTICLE PAGE
ARTICLE I. OFFICES
Section 1.01 Business Office.....................................1
Section 1.02 Registered Office...................................1
ARTICLE II. STOCKHOLDERS
Section 2.01 Annual Stockholder Meeting..........................1
Section 2.02 Special Stockholder Meetings........................1
Section 2.03 Place of Stockholder Meetings.......................2
Section 2.04 Notice of Stockholder Meetings......................2
Section 2.05 Meetings by Telecommunications......................3
Section 2.06 Fixing of Record Date...............................3
Section 2.07 Stockholder List....................................4
Section 2.08 Stockholder Quorum and Voting Requirements..........4
Section 2.09 Increasing either Quorum or Voting Requirements.....4
Section 2.10 Proxies.............................................5
Section 2.11 Voting of Shares....................................5
Section 2.12 Corporation's Acceptance of Votes...................5
Section 2.13 Inspectors of Election..............................6
Section 2.14 Stockholder Action without Meeting..................6
Section 2.15 Vote Required; Election of Directors................7
Section 2.16 Business at Annual Meeting..........................7
Section 2.17 Notification of Nominations.........................8
Section 2.18 Conduct of Meeting..................................9
Section 2.19 Stockholder's Rights To Inspect Corporate Records...9
Section 2.20 Financial Statements Shall Be Furnished to the
Stockholders.....................................10
Section 2.21 Dissenters' Rights.................................10
ARTICLE III. BOARD OF DIRECTORS
Section 3.01 General Powers.....................................10
Section 3.02 Number, Tenure and Qualification of Directors......11
Section 3.03 Regular Meetings of the Board of Directors.........11
Section 3.04 Special Meetings of the Board of Directors.........11
Section 3.05 Notice of, and Waiver of Notice for, Special
Director Meetings................................11
Section 3.06 Director Quorum....................................11
Section 3.07 Directors, Manner of Acting........................12
Section 3.08 Establishing a "Supermajority" Quorum or Voting
Requirement......................................12
Section 3.09 Director Action without a Meeting..................12
Section 3.10 Removal of Directors...............................13
Section 3.11 Board of Director Vacancies........................13
Section 3.12 Director Compensation..............................13
Section 3.13 Director Committees................................14
Adopted February 14, 2006 i
ARTICLE IV. OFFICERS
Section 4.01 Number of Officers.................................15
Section 4.02 Appointment and Term of Office.....................15
Section 4.03 Removal of Officers................................15
Section 4.04 Chairman...........................................15
Section 4.05 Chief Executive Officer............................15
Section 4.06 President..........................................16
Section 4.07 Vice Presidents....................................16
Section 4.08 Secretary..........................................16
Section 4.09 Chief Financial Officer............................16
Section 4.10 Assistant Secretaries and Assistant Treasurers.....16
Section 4.11 Salaries...........................................17
ARTICLE V. INDEMNIFICATION
Section 5.01 Indemnification of Directors, Officers, Agents,
and Employees....................................17
Section 5.02 Advance Expenses for Directors, Officers,
Agents, and Employees............................17
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 6.01 Certificates for Shares............................17
Section 6.02 Shares Without Certificates........................18
Section 6.03 Registration of the Transfer of Shares.............19
Section 6.04 Restrictions on Transfer of Shares Permitted.......19
Section 6.05 Acquisition of Shares..............................19
ARTICLE VII. DISTRIBUTIONS....................................................20
ARTICLE VIII. CORPORATE SEAL..................................................20
ARTICLE IX. DIRECTORS' CONFLICTING INTEREST TRANSACTIONS......................20
ARTICLE X. AMENDMENTS.........................................................21
ARTICLE XI. FISCAL YEAR.......................................................21
CERTIFICATE OF SECRETARY......................................................21
Adopted February 14, 2006 ii
BYLAWS
OF
ARADYME DEVELOPMENT CORPORATION
ARTICLE I. OFFICES
Section 1.01 Business Office
The principal executive office of the corporation shall be located at
any place either within or without the state of Utah as designated in the
corporation's most current annual report filed with the Utah Division of
Corporations and Commercial Code. The corporation may have such other offices,
either within or without the state of Utah, as the board of directors may
designate or as the business of the corporation may require from time to time.
The corporation shall maintain at its principal executive office a copy of
certain records, as specified in section 2.19 of Article II.
Section 1.02 Registered Office
The registered office of the corporation, required by Section
16-10a-501 of the Utah Revised Business Corporation Act (the "Act") or any
section of like tenor as from time to time amended shall be located within Utah
and may be, but need not be, identical with the principal executive office (if
located within Utah). The address of the registered office may be changed from
time to time.
ARTICLE II. STOCKHOLDERS
Section 2.01 Annual Stockholder Meeting
The annual meeting of the stockholders shall be held at a time and date
as are determined by the corporation's board of directors for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the state of Utah, such meeting shall be held on the next succeeding
business day.
If the election of directors shall not be held on the day designated
herein for any annual meeting of the stockholders, or at any subsequent
continuation after adjournment thereof, the board of directors shall cause the
election to be held at a special meeting of the stockholders as soon thereafter
as convenient. The failure to hold an annual or special meeting does not affect
the validity of any corporate action or work a forfeiture or dissolution of the
corporation.
Section 2.02 Special Stockholder Meetings
Special meetings of the stockholders, for any purpose or purposes
described in the meeting notice, may be called by the president or by the board
of directors and shall be called by the president at the request of the holders
of not less than one-tenth of all outstanding votes of the corporation entitled
to be cast on any issue at the meeting.
Adopted February 14, 2006 1
Section 2.03 Place of Stockholder Meetings
The board of directors may designate any place, either within or
without the state of Utah, as the place of meeting for any annual or any special
meeting of the stockholders. If no designation is made by either the directors
or majority action of the voting stockholders, the place of meeting shall be the
principal executive office of the corporation.
Section 2.04 Notice of Stockholder Meetings
Written notice stating the place, day and time of any annual or special
stockholder meeting shall be delivered not less than 10 nor more than 60 days
before the date of the meeting, either in person, by any form of electronic
communication, by mail, by private carrier, or by any other manner provided for
in the Act, by or at the direction of the president, the board of directors, or
other persons calling the meeting, to each stockholder of record entitled to
vote at such meeting and to any other stockholder entitled by the Act or the
articles of incorporation to receive notice of the meeting. Notice shall be
deemed to be effective at the earlier of: (a) when deposited in the United
States mail, addressed to the stockholder at his or her address as it appears on
the stock transfer books of the corporation, with postage thereon prepaid; (b)
on the date shown on the return receipt if sent by registered or certified mail,
return receipt requested, and the receipt is signed by or on behalf of the
addressee; (c) when received; or (d) five days after deposit in the United
States mail, if mailed postage prepaid and correctly addressed to an address
other than that shown in the corporation's current record of stockholders.
If any stockholder meeting is adjourned to a different date, time, or
place, notice need not be given of the new date, time, and place, if the new
date, time, and place are announced at the meeting before adjournment. If a new
record date for the adjourned meeting is, or must be fixed (see section 2.08 of
this Article II) or if the adjournment is for more than 30 days, then notice
must be given pursuant to the requirements of the previous paragraph of this
section 2.04, to those persons that are stockholders as of the new record date.
The stockholder may waive notice of the meeting (or any notice required
by the Act, articles of incorporation or bylaws) by a writing signed by the
stockholder entitled to the notice, which is delivered to the corporation
(either before or after the date and time stated in the notice) for inclusion in
the minutes or filing with the corporate records.
A stockholder's attendance at a meeting:
(a) waives objection to lack of notice or defective notice of
the meeting, unless the stockholder at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting;
and
(b) waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in
the meeting notice, unless the stockholder objects to considering the
matter when it is presented.
The notice of each special stockholder meeting shall include a
description of the purpose or purposes for which the meeting is called. Except
as provided in this section 2.04, the articles of incorporation, or otherwise in
the Act, the notice of an annual stockholder meeting need not include a
description of the purpose or purposes for which the meeting is called.
Adopted February 14, 2006 2
If a purpose of any stockholder meeting is to consider either: (a) a
proposed amendment to the articles of incorporation (including any restated
articles requiring stockholder approval); (b) a plan of merger or share
exchange; (c) the sale, lease, exchange or other disposition of all, or
substantially all, of the corporation's property; (d) the dissolution of the
corporation; or (e) the removal of a director, the notice must so state and, to
the extent applicable, be accompanied by a copy or summary of the articles of
amendment, plan of merger or share exchange, agreement for the disposition of
all or substantially all of the corporation's property, or the terms of the
dissolution. If the proposed corporate action creates dissenters' rights, the
notice must state that stockholders are or may be entitled to assert dissenters'
rights and must be accompanied by a copy of the provisions of the Act governing
such rights.
Section 2.05 Meetings by Telecommunications
Any or all of the stockholders may participate in an annual or special
meeting of stockholders by, or the meeting may be conducted through the use of,
any means of communication by which all persons participating in the meeting can
hear each other during the meeting. A stockholder participating in a meeting by
this means is considered to be present in person at the meeting.
Section 2.06 Fixing of Record Date
For the purpose of determining stockholders of any voting group
entitled to notice of or to vote at any meeting of stockholders, or stockholders
entitled to receive payment of any distribution or dividend, or in order to make
a determination of stockholders for any other proper purpose, the board of
directors may fix in advance a date as the record date. Such record date shall
not be more than 70 days prior to the meeting of stockholders or the payment of
any distribution or dividend. If no record date is so fixed by the board of
directors for the determination of stockholders entitled to notice of or to vote
at a meeting of stockholders, or stockholders entitled to receive a share
dividend or distribution, or in order to make a determination of stockholders
for any other proper purpose, the record date for determination of such
stockholders shall be at the close of business on:
(a) with respect to an annual stockholder meeting or any
special stockholder meeting called by the board of directors or any
person specifically authorized by the board of directors or these
bylaws to call a meeting, the day before the first notice is delivered
to stockholders;
(b) with respect to a special stockholders' meeting demanded
by the stockholders, the date the first stockholder signs the demand;
(c) with respect to the payment of a share dividend, the date
the board of directors authorizes the share dividend;
(d) with respect to actions taken in writing without a meeting
(pursuant to Article II, section 2.14), the date the first stockholder
signs a consent; and
(e) with respect to a distribution to stockholders (other than
one involving a repurchase or reacquisition of shares), the date the
board authorizes the distribution.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section 2.06, such determination
shall apply to any adjournment thereof unless the board of directors fixes a new
record date. A new record date must be fixed if the meeting is adjourned to a
date more than 120 days after the date fixed for the original meeting.
Adopted February 14, 2006 3
Section 2.07 Stockholder List
The officer or agent having charge of the stock transfer books for
shares of the corporation shall make a complete record of the stockholders
entitled to vote at each meeting of stockholders, arranged in alphabetical order
with the address of and the number of shares held by each. The list must be
arranged by voting group (if such exists, see Article II, section 2.08) and
within each voting group by class or series of shares. The stockholder list must
be available for inspection by any stockholder, beginning on the earlier of 10
days before the meeting for which the list was prepared or two business days
after notice of the meeting is given for which the list was prepared and
continuing through the meeting. The list shall be available at the corporation's
principal executive office or at a place identified in the meeting notice in the
city where the meeting is to be held. A stockholder, or his or her agent or
attorney, is entitled, on written demand, to inspect and, subject to the
requirements of section 2.19 of this Article II and Sections 16-10a-1602 and
16-10a-1603 of the Act, or any sections of like tenor as from time to time
amended, to inspect and copy the list during regular business hours, at his or
her expense, during the period it is available for inspection. The corporation
shall maintain the stockholder list in written form or in another form capable
of conversion into written form within a reasonable time.
Section 2.08 Stockholder Quorum and Voting Requirements
If the articles of incorporation or the Act provides for voting by a
single voting group on a matter, action on that matter is taken when voted upon
by that voting group.
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the articles of incorporation, a bylaw adopted pursuant to
section 2.09 of this Article II, or the Act provides otherwise, a majority of
the votes entitled to be cast on the matter by the voting group constitutes a
quorum of that voting group for action on that matter.
If the articles of incorporation or the Act provides for voting by two
or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately. Action may be
taken by one voting group on a matter even though no action is taken by another
voting group entitled to vote on the matter.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation, a bylaw adopted pursuant to section 2.09 of this
Article II, or the Act require a greater number of affirmative votes.
Section 2.09 Increasing either Quorum or Voting Requirements
For purposes of this section 2.09, a "supermajority" quorum is a
requirement that more than a majority of the votes of the voting group be
present to constitute a quorum; and a "supermajority" voting requirement is any
requirement that requires the vote of more than a majority of the affirmative
votes of a voting group at a meeting.
Adopted February 14, 2006 4
The articles of incorporation may fix a supermajority quorum or
supermajority-voting requirement to adopt, amend, or delete a bylaw.
The adoption or amendment of a bylaw that adds, changes or deletes a
supermajority quorum or voting requirement for stockholders must meet the same
quorum requirement and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirement then in effect or proposed
to be adopted, whichever is greater.
A bylaw adopted by the stockholders that fixes a supermajority quorum
or voting requirement for stockholders may not be adopted, amended, or repealed
by the board of directors.
Section 2.10 Proxies
At all meetings of stockholders, a stockholder may vote in person or
vote by proxy executed in writing by the stockholder or by his or her duly
authorized attorney-in-fact. Such proxy shall be filed with the secretary of the
corporation or other person authorized to tabulate votes before or at the time
of the meeting. No proxy shall be valid after 11 months from the date of its
execution unless otherwise provided in the proxy.
Section 2.11 Voting of Shares
Unless otherwise provided in the articles of incorporation, each
outstanding share entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of stockholders.
Except as provided by specific court order, no shares held by another
corporation, if a majority of the shares entitled to vote for the election of
directors of such other corporation are held by the corporation, shall be voted
at any meeting or counted in determining the total number of outstanding shares
at any given time for purposes of any meeting; provided, however, the prior
sentence shall not limit the power of the corporation to vote any shares,
including its own shares, held by it in a fiduciary capacity.
Redeemable shares are not entitled to vote after notice of redemption
is mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
Section 2.12 Corporation's Acceptance of Votes
If the name signed on a vote, consent, waiver, proxy appointment or
proxy appointment revocation corresponds to the name of a stockholder, the
corporation, if acting in good faith, is entitled to accept the vote, consent,
waiver, proxy appointment or proxy appointment revocation and give it effect as
the act of the stockholder.
If the name signed on a vote, consent, waiver, proxy appointment or
proxy appointment revocation does not correspond to the name of its stockholder,
the corporation, if acting in good faith, is nevertheless entitled to accept the
vote, consent, waiver, proxy appointment or proxy appointment revocation and
give it effect as the act of the stockholder if:
(a) the stockholder is an entity as defined in the Act and the
name signed purports to be that of an officer or agent of the entity;
Adopted February 14, 2006 5
(b) the name signed purports to be that of an administrator,
executor, guardian or conservator representing the stockholder and, if
the corporation requests, evidence of fiduciary status acceptable to
the corporation has been presented with respect to the vote, consent,
waiver, proxy appointment or proxy appointment revocation;
(c) the name signed purports to be that of a receiver or
trustee in bankruptcy of the stockholder and, if the corporation
requests, evidence of this status acceptable to the corporation has
been presented with respect to the vote, consent, waiver, proxy
appointment or proxy appointment revocation;
(d) the name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the stockholder and, if the
corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the stockholder has been presented
with respect to the vote, consent, waiver, proxy appointment or proxy
appointment revocation; and
(e) two or more persons are the stockholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one
of the co-owners and the person signing appears to be acting on behalf
of all the co-owners.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the secretary or other officer or
agent authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature or about the signatory's authority
to sign for the stockholder.
The corporation and its officer or agent that accepts or rejects a
vote, consent, waiver, proxy appointment or proxy appointment revocation in good
faith and in accordance with the standards of this section are not liable in
damages to the stockholder for the consequences of the acceptance or rejection.
Corporate action based on the acceptance or rejection of a vote,
consent, waiver, proxy appointment, or proxy appointment revocation under this
section 2.12 is valid unless a court of competent jurisdiction determines
otherwise.
Section 2.13 Inspectors of Election
There shall be appointed at least one inspector of the vote. Such
inspector shall first take and subscribe an oath or affirmation faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his or her ability. Unless appointed in advance of any
such meeting by the board of directors, the presiding officer shall appoint such
inspector for the meeting. In the absence of any such appointment, the secretary
of the corporation shall act as the inspector. No candidate for the office of
director (whether or not then a director) shall be appointed as such inspector.
Such inspector shall be responsible for tallying and certifying each vote,
whether made in person or by proxy.
Section 2.14 Stockholder Action without Meeting
Any action required or permitted to be taken at a meeting of the
stockholders, except for the election of directors as set forth in section 2.15
of this Article II, may be taken without a meeting and without prior notice if
one or more consents in writing, setting forth the action so taken, shall be
signed by stockholders having not less than the minimum number of votes that
would be necessary to authorize or take the action at a meeting at which all
shares entitled to vote with respect to the subject matter thereof are present.
Directors may be elected without a meeting of stockholders by the written
consent of the stockholders holding all of the shares entitled to vote for the
election of directors. Unless the written consents of all stockholders entitled
Adopted February 14, 2006 6
to vote have been obtained, notice of any stockholder approval without a meeting
shall be given at least 10 days before the consummation of the action authorized
by the approval to those stockholders entitled to vote that have not consented
in writing and those stockholders not entitled to vote and to whom the Act
requires that notice of the proposed action be given. If the act to be taken
requires that notice be given to nonvoting stockholders, the corporation shall
give the nonvoting stockholders written notice of the proposed action at least
10 days before the action is taken. The notice shall contain or be accompanied
by the same material that would have been required if a formal meeting had been
called to consider the action. A consent signed under this section 2.14 has the
effect of a meeting vote and may be described as such in any document. The
written consents are only effective if received by the corporation within a
60-day period and not revoked prior to the receipt of the written consent of
that number of stockholders necessary to effectuate such action. Action taken
pursuant to a written consent is effective as of the date the last written
consent necessary to effect the action is received by the corporation, unless
all of the written consents necessary to effect the action specify a later date
as the effective date of the action, in which case the later date shall be the
effective date of the action. If the corporation has received written consents
signed by all stockholders entitled to vote with respect to the action, the
effective date of the action may be any date that is specified in all the
written consents as the effective date of the action. Such consents may be
executed in any number of counterparts or evidenced by any number of instruments
of substantially similar tenor.
Section 2.15 Vote Required; Election of Directors
The election need not be by ballot unless any stockholder so demands
before the voting begins. Except as otherwise provided by law, the articles of
incorporation, any preferred stock designation, or these bylaws, all matters
other than the election of directors submitted to the stockholders at any
meeting shall be decided by a majority of the votes cast with respect thereto.
At all meetings of the stockholders at which directors are to be elected, except
as otherwise set forth in any stock designation with respect to the right of the
holders of any class or series of stock to elect additional directors under
specified circumstances, directors shall be elected by a plurality of the votes
cast at the meeting.
Section 2.16 Business at Annual Meeting
At any annual meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting by or at the direction
of the board of directors or by any stockholder of record of the corporation
that is entitled to vote with respect thereto and that complies with the notice
procedures set forth in this section. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the secretary of the corporation. To be timely, a
stockholder's notice shall be delivered or mailed to and received at the
principal executive office of the corporation not less than 30 days prior to the
date of the annual meeting; provided, in the event that less than 40 days'
notice of the date of the meeting is given or made to stockholders, to be
timely, a stockholder's notice shall be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the annual meeting was mailed. A stockholder's notice to the secretary shall set
forth as to each matter such stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder of record proposing such business, (c) the class and number of
shares of the corporation's capital stock that are beneficially owned by such
stockholder, and (d) any material interest of such stockholder in such business.
Notwithstanding anything in these bylaws to the contrary, no business shall be
brought before or conducted at an annual meeting except in accordance with the
Adopted February 14, 2006 7
provisions of this section. The officer of the corporation or other person
presiding at the annual meeting shall, if the facts so warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with such provisions, and if such presiding officer should so
determine and declare to the meeting that such business was not properly brought
before the meeting in accordance with such provisions, any such business so
determined to be not properly brought before the meeting shall not be
transacted. The foregoing provisions of this section shall be effective only if
the corporation has a class of equity securities registered under Section 12(b)
or (g) of the Securities Exchange Act of 1934, as amended.
Section 2.17 Notification of Nominations
Nominations for the election of directors may be made by the board of
directors or by any stockholder entitled to vote for the election of directors.
Any stockholder entitled to vote for the election of directors at a meeting may
nominate persons for election as directors only if written notice of such
stockholder's intent to make such nomination is given, either by personal
delivery or by United States mail, postage prepaid, to the secretary of the
corporation not later than (a) with respect to an election to be held at an
annual meeting of stockholders, 90 days in advance of such meeting, and (b) with
respect to an election to be held at a special meeting of stockholders for the
election of directors, the close of business on the seventh day following the
date on which notice of such meeting is first given to stockholders.
Each such notice shall set forth:
(a) the name and address of the stockholder that intends to
make the nomination and of the person or persons to be nominated;
(b) a representation that such stockholder is a holder of
record of stock of the corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice;
(c) a description of all arrangements or understandings
between such stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by such stockholder;
(d) such other information regarding each nominee proposed by
such stockholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had each nominee been nominated, or intended to be
nominated by the board of directors; and
(e) the consent of each nominee to serve as a director of the
corporation if elected.
The chairman of a stockholder meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.
The foregoing provisions of this section shall be effective only if the
corporation has a class of equity securities registered under Section 12(b) or
(g) of the Securities Exchange Act of 1934, as amended.
Adopted February 14, 2006 8
Section 2.18 Conduct of Meeting
The board of directors of the corporation shall be entitled to make
such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate, or convenient. Subject to such rules and
regulations of the board of directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants, regulation of the
opening and closing of the polls for balloting on matters that are to be voted
on by ballot. Unless, and to the extent, determined by the board of directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
Section 2.19 Stockholder's Rights To Inspect Corporate Records
(a) The corporation shall keep as permanent records minutes of
all meetings of its stockholders and board of directors, a record of
all actions taken by the stockholders or board of directors without a
meeting, and a record of all actions taken by a committee of the board
of directors in place of the board of directors on behalf of the
corporation. The corporation shall maintain appropriate accounting
records.
(b) If a stockholder gives the corporation written notice of
his or her demand at least five business days before the date on which
he or she wishes to inspect and copy, such stockholder (or his or her
agent or attorney) has the right to inspect and copy, during regular
business hours, any of the following records, all of which the
corporation is required to keep at its principal executive office:
(i) its articles or restated articles of
incorporation and all amendments to the articles of
incorporation currently in effect;
(ii) its bylaws or restated bylaws and all amendments
to the bylaws currently in effect;
(iii) the minutes of all stockholders' meetings and
records of all action taken by stockholders without a meeting
for the past three years;
(iv) all written communications to stockholders
within the past three years;
(v) a list of the names and business addresses of its
current directors and officers;
(vi) the most recent annual report of the corporation
delivered to the Utah Division of Corporations and Commercial
Code; and
(vii) all financial statements prepared for periods
ending during the last three years that a stockholder could
request under section 2.20.
Adopted February 14, 2006 9
(c) In addition, if a stockholder gives the corporation a
written demand made in good faith and for a proper purpose at least
five business days before the date on which such stockholder wishes to
inspect and copy, such stockholder describes with reasonable
particularity his or her purpose and the records he or she desires to
inspect, and the records are directly connected with his or her
purpose, such stockholder of the corporation (or his or her agent or
attorney) is entitled to inspect and copy, during regular business
hours at a reasonable location specified by the corporation, any of the
following records of the corporation:
(i) excerpts from minutes of any meeting of the board
of directors, records of any action of a committee of the
board of directors acting on behalf of the corporation,
minutes of any meeting of the stockholders, and records of
action taken by the stockholders or board of directors without
a meeting, to the extent not subject to inspection under
subparagraph (b) of this section 2.19;
(ii) accounting records of the corporation; and
(iii) the record of stockholders (compiled no earlier
than the date of the stockholder's demand).
(d) The right to copy records includes, if reasonable, the
right to receive copies made by photographic, xerographic, or other
means. The corporation may impose a reasonable charge, covering the
costs of labor and material (including third-party costs), for copies
of any documents provided to the stockholder. The charge may not exceed
the estimated cost of production or reproduction of the records.
(e) For purposes of this section 2.19, the term "stockholder"
shall include a beneficial owner whose shares are held in a voting
trust or by a nominee on his or her behalf.
Section 2.20 Financial Statements Shall Be Furnished to the
Stockholders
Upon written request of any stockholder, the corporation shall mail to
such stockholder its most recent annual or quarterly financial statements
showing in reasonable detail its assets and liabilities and the results of its
operations.
Section 2.21 Dissenters' Rights
Each stockholder shall have the right to dissent from and obtain
payment for such stockholder's shares when so authorized by the Act, the
articles of incorporation, these bylaws, or in a resolution of the board of
directors.
ARTICLE III. BOARD OF DIRECTORS
Section 3.01 General Powers
Unless the articles of incorporation have dispensed with or limited the
authority of the board of directors, all corporate powers shall be exercised by
or under the authority of, and the business and affairs of the corporation shall
be managed under the direction of, the board of directors.
Adopted February 14, 2006 10
Section 3.02 Number, Tenure and Qualification of Directors
Unless permitted by the Act, the authorized number of directors shall
be not less than three. The current number of directors shall be as determined
(or as amended from time to time) by resolution adopted from time to time by
either the stockholders or directors. Each director shall hold office until the
next annual meeting of stockholders or until removed. However, if his or her
term expires, he or she shall continue to serve until his or her successor shall
have been elected and qualified, or until there is a decrease in the number of
directors. A decrease in the number of directors does not shorten an incumbent
director's term. Unless required by the articles of incorporation, directors do
not need to be residents of Utah or stockholders of the corporation.
Section 3.03 Regular Meetings of the Board of Directors
A regular meeting of the board of directors shall be held without other
notice than this bylaw immediately after, and at the same place as, the annual
meeting of stockholders. The board of directors may provide, by resolution, the
time and place for the holding of additional regular meetings without other
notice than such resolution.
Section 3.04 Special Meetings of the Board of Directors
Special meetings of the board of directors may be called by or at the
request of the president or any one director. The person authorized to call
special meetings of the board of directors may fix any place as the place for
holding any special meeting of the board of directors.
Section 3.05 Notice of, and Waiver of Notice for, Special Director
Meetings
Unless the articles of incorporation provide for a longer or shorter
period, notice of any special director meeting shall be given at least two days
prior thereto either orally, in person, by telephone, by any form of electronic
communication, by mail, by private carrier, or by any other manner provided for
in the Act. Any director may waive notice of any meeting. Except as provided in
the next sentence, the waiver must be in writing, signed by the director
entitled to the notice, and filed with the minutes or corporate records. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business and at the beginning of the
meeting (or promptly upon his or her arrival) objects to holding the meeting or
transacting business at the meeting, and does not thereafter vote for or assent
to action taken at the meeting. Unless required by the articles of incorporation
or the Act, neither the business to be transacted at nor the purpose of any
special meeting of the board of directors need be specified in the notice or
waiver of notice of such meeting.
Section 3.06 Director Quorum
A majority of the number of directors in office immediately before the
meeting begins shall constitute a quorum for the transaction of business at any
meeting of the board of directors, unless the articles of incorporation require
a greater number.
Any amendment to this quorum requirement is subject to the provisions
of section 3.08 of this Article III.
Adopted February 14, 2006 11
Section 3.07 Directors, Manner of Acting
The act of the majority of the directors present at a meeting at which
a quorum is present when the vote is taken shall be the act of the board of
directors unless the articles of incorporation require a greater percentage. Any
amendment that changes the number of directors needed to take action is subject
to the provisions of section 3.08 of this Article III.
Unless the articles of incorporation provide otherwise, any or all
directors may participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.
A director who is present at a meeting of the board of directors or a
committee of the board of directors when corporate action is taken is deemed to
have assented to the action taken unless: (a) he or she objects at the beginning
of the meeting (or promptly upon his or her arrival) to holding it or
transacting business at the meeting; or (b) his or her dissent or abstention
from the action taken is requested by such director to be entered in the minutes
of the meeting; or (c) he or she delivers written notice of his or her dissent
or abstention to the presiding officer of the meeting before its adjournment or
to the corporation immediately after adjournment of the meeting. The right of
dissent or abstention is not available to a director who votes in favor of the
action taken.
Section 3.08 Establishing a "Supermajority" Quorum or Voting
Requirement
For purposes of this section 3.08, a "supermajority" quorum is a
requirement that requires more than a majority of the directors in office to
constitute a quorum; and a "supermajority" voting requirement is any requirement
that requires the vote of more than a majority of those directors present at a
meeting at which a quorum is present to be the act of the directors.
A bylaw that fixes a supermajority quorum or supermajority voting
requirement may be amended or repealed:
(a) if originally adopted by the stockholders, only by the
stockholders (unless otherwise provided by the stockholders); or
(b) if originally adopted by the board of directors, either by
the stockholders or by the board of directors.
A bylaw adopted or amended by the stockholders that fixes a
supermajority quorum or supermajority-voting requirement for the board of
directors may provide that it may be amended or repealed only by a specified
vote of either the stockholders or the board of directors.
Subject to the provisions of the preceding paragraph, action by the
board of directors to adopt, amend or repeal a bylaw that changes the quorum or
voting requirement for the board of directors must meet the same quorum
requirement and be adopted by the same vote required to take action under the
quorum and voting requirement then in effect or proposed to be adopted,
whichever is greater.
Section 3.09 Director Action without a Meeting
Unless the articles of incorporation provide otherwise, any action
required or permitted to be taken by the board of directors at a meeting may be
taken without a meeting if all the directors sign a written consent describing
the action taken, and such consent is filed with the records of the corporation.
Action taken by consent is effective when the last director signs the consent,
unless the consent specifies a different effective date. A signed consent has
the effect of a meeting vote and may be described as such in any document. Such
consent may be executed in any number of counterparts or evidenced by any number
of instruments of substantially similar tenor.
Adopted February 14, 2006 12
Section 3.10 Removal of Directors
The stockholders may remove one or more directors at a meeting called
for that purpose if notice has been given that the purpose of the meeting is
such removal. The removal may be with or without cause unless the articles of
incorporation provide that directors may only be removed with cause. If a
director is elected by a voting group of stockholders, only the stockholders of
that voting group may participate in the vote to remove him or her. If
cumulative voting is authorized, a director may not be removed if the number of
votes sufficient to elect him or her under cumulative voting is voted against
his or her removal. If cumulative voting is not authorized, a director may be
removed only if the number of votes cast to remove him or her exceeds the number
of votes cast against such removal.
Section 3.11 Board of Director Vacancies.
Unless the articles of incorporation provide otherwise, if a vacancy
occurs on the board of directors, including a vacancy resulting from an increase
in the number of directors, the stockholders may fill the vacancy. During such
time that the stockholders fail or are unable to fill such vacancies, then and
until the stockholders act:
(a) the board of directors may fill the vacancy; or
(b) if the directors remaining in office constitute fewer than
a quorum of the board, they may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
If the vacant office was held by a director elected by a voting group
of stockholders, only the holders of shares of that voting group are entitled to
vote to fill the vacancy if it is filled by the stockholders. If two or more
directors are elected by the same voting group, only remaining directors elected
by such voting group are entitled to vote to fill the vacancy of a director
elected by the voting group if it is filled by directors.
A vacancy that will occur at a specific later date (by reason of
resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
The term of a director elected to fill a vacancy expires at the next
stockholders' meeting at which directors are elected. However, if his or her
term expires, he or she shall continue to serve until his or her successor is
elected and qualified or until there is a decrease in the number of directors.
Section 3.12 Director Compensation
Unless otherwise provided in the articles of incorporation or by
resolution of the board of directors, each director may be paid his or her
expenses, if any, of attendance at each meeting of the board of directors and
may be paid a stated salary as director or a fixed sum for attendance at each
meeting of the board of directors or both. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
Adopted February 14, 2006 13
Section 3.13 Director Committees
(a) Unless the articles of incorporation provide otherwise,
the board of directors may create one or more committees and appoint
members of the board of directors to serve on them. Each committee must
have two or more members, who serve at the pleasure of the board of
directors.
(b) The creation of a committee and appointment of members to
it must be approved by the greater of (i) a majority of all the
directors in office when the action is taken or (ii) the number of
directors required by the articles of incorporation to take such action
(or if not specified in the articles of incorporation, the number
required by section 3.07 of this Article III to take action).
(c) Sections 3.04, 3.05, 3.06, 3.07, 3.08 and 3.09 of this
Article III, which govern meetings, action without meetings, notice and
waiver of notice, quorum and voting requirements of the board of
directors, apply to committees and their members.
(d) Unless limited by the articles of incorporation, each
committee may exercise those aspects of the authority of the board of
directors that the board of directors confers upon such committee in
the resolution creating the committee; provided, however, a committee
may not:
(i) authorize distributions to stockholders;
(ii) approve, or propose to stockholders, action that
the Act requires be approved by stockholders;
(iii) fill vacancies on the board of directors or on
any of its committees;
(iv) amend the articles of incorporation pursuant to
the authority of directors to do so granted by Section
16-10a-1002 of the Act or any section of like tenor as from
time to time amended;
(v) adopt, amend, or repeal bylaws;
(vi) approve a plan of merger not requiring
stockholder approval;
(vii) authorize or approve reacquisition of shares,
except according to a formula or method prescribed by the
board of directors; or
(viii) authorize or approve the issuance or sale or
contract for sale of shares or determine the designation and
relative rights, preferences and limitations of a class or
series of shares, except that the board of directors may
authorize a committee (or a senior executive officer of the
corporation) to do so within limits specifically prescribed by
the board of directors.
Adopted February 14, 2006 14
ARTICLE IV. OFFICERS
Section 4.01 Number of Officers
The officers of the corporation shall be a chief executive officer, a
president, a secretary, and a chief financial officer, all of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary, including any vice presidents, may be appointed by
the board of directors. If specifically authorized by the board of directors, an
officer may appoint one or more officers or assistant officers. The same
individual may simultaneously hold more than one office in the corporation.
Section 4.02 Appointment and Term of Office
The board of directors shall appoint the officers of the corporation
for a term as determined by the board of directors. If no term is specified,
such term shall continue until the first meeting of the directors held after the
next annual meeting of stockholders. If the appointment of officers shall not be
made at such meeting, such appointment shall be made as soon thereafter as is
convenient. Each officer shall hold office until his or her successor shall have
been duly appointed and shall have qualified, until his or her death, or until
he or she shall resign or shall have been removed in the manner provided in
section 4.03 of this Article IV.
Section 4.03 Removal of Officers
Any officer or agent may be removed by the board of directors or an
officer authorized to do so by the board of directors at any time either before
or after the expiration of the designated term, with or without cause. Such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. Neither the appointment of an officer nor the designation of a
specified term shall create any contract rights.
Section 4.04 Chairman
The board of directors may elect one of its members as chairman who, if
so elected, shall preside at all meetings of the board of directors and shall be
a member of the executive committee, if any. In the absences of a chairman or if
no chairman is elected, the president shall preside at meetings of the board of
directors.
Section 4.05 Chief Executive Officer
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the chief executive officer shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction, and control of the business and officers of the
corporation. He shall preside at all meetings of the stockholders and at all
meetings of the board of directors. He shall be ex officio a member of all the
standing committees, including the executive committee, if any, and shall have
the general power and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or these bylaws.
Adopted February 14, 2006 15
Section 4.06 President
The president shall be the chief operating officer of the corporation,
and in the event of absence or disability of the chief executive officer, or if
no chief executive officer has been appointed by the board of directors, shall
perform all the duties of the chief executive officer, and when so acting shall
have all the powers of, and be subject to all the restrictions upon, the chief
executive officer.
Section 4.07 Vice Presidents
In the absence or disability of the president, the vice presidents in
order of their rank as fixed by the board of directors or, if not ranked, a vice
president designated by the board of directors, if there be such an officer or
officers, shall perform all the duties of the president, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents, if there be such an officer or officers, shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors or these bylaws.
Section 4.08 Secretary
The secretary shall record or cause to be recorded, and shall keep or
cause to be kept, at the principal executive office or such other place as the
board of directors may order, a book of minutes of all meetings and actions of
the stockholders, the board directors, and all committees thereof, with the time
and place of holding of meetings, whether regular or special, and, if special,
how authorized, the notice thereof given, the names of those present at
directors' meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, if one be appointed, a share register, or a duplicate share register,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the same, and the number and date of cancellation of every certificate
surrendered for cancellation.
Section 4.09 Chief Financial Officer
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and colored accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings,
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial
condition of the corporation, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or these bylaws.
Section 4.10 Assistant Secretaries and Assistant Treasurers
In the absence or disability of the secretary or the chief financial
officer, their duties shall be performed and their powers exercised,
respectively, by any assistant secretary or any assistant treasurer that the
board of directors may have elected or appointed. The assistant secretaries and
the assistant treasurers shall have such other duties and powers as may have
been delegated to them, respectively, by the secretary or the chief financial
officer or by the board of directors.
Adopted February 14, 2006 16
Section 4.11 Salaries
The salaries of the officers shall be fixed from time to time by the
board of directors or by a duly authorized officer.
ARTICLE V. INDEMNIFICATION
Section 5.01 Indemnification of Directors, Officers, Agents, and
Employees
The corporation shall indemnify any individual made a party to a
proceeding because such individual was a director, officer, agent, or employee
of the corporation to the extent permitted by and in accordance with Section
16-10a-901, et seq. of the Act or any amendments of successor sections of like
tenor.
Section 5.02 Advance Expenses for Directors, Officers, Agents, and
Employees
To the extent permitted by Sections 16-10a-904 and -907of the Act or
any sections of like tenor as amended from time to time, the corporation may pay
for or reimburse the reasonable expenses incurred by a director, officer, agent,
or employee that is a party to a proceeding in advance of final disposition of
the proceeding, if:
(a) the director, officer, agent, or employee furnishes the
corporation a written affirmation of his or her good faith belief that
he or she has met the standard of conduct described in the Act;
(b) the director, officer, agent, or employee furnishes the
corporation a written undertaking, executed personally or on his or her
behalf, to repay advances if it is ultimately determined that he or she
did not meet the standard of conduct (which undertaking must be an
unlimited general obligation of the director but need not be secured
and may be accepted without reference to financial ability to make
repayment); and
(c) a determination is made that the facts then known to those
making the determination would not preclude indemnification under
section 5.01 of this Article V or Section 16-10a-901 through Section
16-10a-909 of the Act or similar sections of like tenor as from time to
time amended.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 6.01 Certificates for Shares
(a) Certificates representing shares of the corporation shall,
at minimum, state on their face the name of the issuing corporation and
that it is formed under the laws of the state of Utah; the name of the
person to whom issued; and the number and class of shares and the
designation of the series, if any, the certificate represents; and be
in such form as determined by the board of directors. Such certificates
shall be signed (either manually or by facsimile) by the president or a
vice president and by the secretary or an assistant secretary and may
be sealed with a corporate seal or a facsimile thereof. Each
certificate for shares shall be consecutively numbered or otherwise
identified.
Adopted February 14, 2006 17
(b) If the corporation is authorized to issue different
classes of shares or different series within a class, the designations,
relative rights, preferences and limitations applicable to each class
and the variations in rights, preferences and limitations determined
for each series (and the authority of the board of directors to
determine variations for future series) must be summarized on the front
or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the corporation will furnish
the stockholder this information without charge on request in writing.
(c) The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the corporation.
(d) All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued until
the former certificate for a like number of shares shall have been
surrendered and canceled, except that in case of a lost, destroyed or
mutilated certificate, a new one may be issued therefor upon such terms
and indemnity to the corporation as the board of directors may
prescribe.
Section 6.02 Shares without Certificates
(a) Unless the articles of incorporation provide otherwise,
the board of directors may authorize the issuance of some or all the
shares of any or all of its classes or series without certificates. The
authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
(b) Within a reasonable time after the issuance or transfer of
shares without certificates, the corporation shall send the stockholder
a written statement containing at minimum:
(i) the name of the issuing corporation and that it
is organized under the laws of the state of Utah;
(ii) the name of the person to whom issued; and
(iii) the number and class of shares and the
designation of the series, if any, of the issued shares.
If the corporation is authorized to issue different classes of shares
or different series within a class, the written statement shall
describe the designations, relative rights, preferences and limitations
applicable to each class and the variation in rights, preferences and
limitations determined for each series (and the authority of the board
of directors to determine variations for future series). Alternatively,
each written statement may state conspicuously that the corporation
will furnish the stockholder this information without charge on request
in writing.
Adopted February 14, 2006 18
Section 6.03 Registration of the Transfer of Shares
Registration of the transfer of shares of the corporation shall be made
only on the stock transfer books of the corporation. In order to register a
transfer, the record owner shall surrender the shares to the corporation for
cancellation, properly endorsed by the appropriate person or persons with
reasonable assurances that the endorsements are genuine and effective. Unless
the corporation has established a procedure by which a beneficial owner of
shares held by a nominee is to be recognized by the corporation as the record
owner of such shares on the books of the corporation, the record owner shall be
deemed by the corporation to be the owner thereof for all purposes.
Section 6.04 Restrictions on Transfer of Shares Permitted
The board of directors (or stockholders) may impose restrictions on the
transfer or registration of transfer of shares (including any security
convertible into, or carrying a right to subscribe for or acquire, shares). A
restriction does not affect shares issued before the restriction was adopted
unless the holders of the shares are parties to the restriction agreement or
voted in favor of the restriction.
A restriction on the transfer or registration of transfer of shares is
authorized to maintain the corporation's status when it is dependent on the
number or identity of its stockholders, to preserve entitlements, benefits, or
exemptions under federal, state, or local law; and for any other reasonable
purpose.
A restriction on the transfer or registration of transfer of shares
may:
(a) obligate the stockholder first to offer the corporation or
other persons (separately, consecutively or simultaneously) an
opportunity to acquire the restricted shares;
(b) obligate the corporation or other persons (separately,
consecutively or simultaneously) to acquire the restricted shares;
(c) require the corporation, the holders of any class of its
shares, or another person to approve the transfer of the restricted
shares, if the requirement is not manifestly unreasonable; and
(d) prohibit the transfer of the restricted shares to
designated persons or classes of persons, if the prohibition is not
manifestly unreasonable.
A restriction on the transfer or registration of transfer of shares is
valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section 6.04 and such person has knowledge of
the restriction or its existence is noted conspicuously on the front or back of
the certificate or is contained in the written statement required by section
6.02 of this Article VI with regard to shares issued without certificates.
Unless so noted, a restriction is not enforceable against a person without
knowledge of the restriction.
Section 6.05 Acquisition of Shares
The corporation may acquire its own shares and unless otherwise
provided in the articles of incorporation, the shares so acquired constitute
authorized but unissued shares.
Adopted February 14, 2006 19
If the articles of incorporation prohibit the reissuance of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired by the corporation effective upon amendment of the articles of
incorporation, which amendment may be adopted by the stockholders or the board
of directors without stockholder action. The articles of amendment must be
delivered to the Utah Division of Corporations and Commercial Code for filing
and must set forth:
(a) the name of the corporation;
(b) the reduction in the number of authorized shares, itemized
by class and series;
(c) the total number of authorized shares, itemized by class
and series, remaining after reduction of the shares; and
(d) if applicable, a statement that the amendment was adopted
by the board of directors without stockholder action and that
stockholder action was not required.
ARTICLE VII. DISTRIBUTIONS
The corporation may make distributions (including dividends on its
outstanding shares) as authorized by the board of directors and in the manner
and upon the terms and conditions provided by law and in the corporation's
articles of incorporation.
ARTICLE VIII. CORPORATE SEAL
The board of directors may provide for a corporate seal, which may have
inscribed thereon any designation including the name of the corporation, Utah as
the state of incorporation, and the words "Corporate Seal."
ARTICLE IX. DIRECTORS' CONFLICTING INTEREST TRANSACTIONS
A director's conflicting interest transaction may not be enjoined, be
set aside, or give rise to an award of damages or other sanctions in a
proceeding by a stockholder, or by or in the right of the corporation, solely
because the director, or any person with whom or which the director has a
personal, economic or other association, has an interest in the transaction, if:
(a) directors' action respecting the transaction was at any
time taken in compliance with Section 16-10a-852 of the Act or any
section of like tenor as amended from time to time;
(b) stockholders' action respecting the transaction was at any
time taken in compliance with Section 16-10a-853 of the Act or any
section of like tenor as amended from time to time; or
(c) the transaction, judged according to the circumstances at
the time of commitment, is established to have been fair to the
corporation.
Adopted February 14, 2006 20
ARTICLE X. AMENDMENTS
The corporation's board of directors may amend or repeal the
corporation's bylaws unless:
(a) the Act or the articles of incorporation reserve this
power exclusively to the stockholders in whole or part; or
(b) the stockholders in adopting, amending or repealing a
particular bylaw provide expressly that the board of directors may not
amend or repeal that bylaw; or
(c) the bylaw either establishes, amends, or deletes a
supermajority stockholder quorum or voting requirement (as defined in
Article II, section 2.09).
Any amendment that changes the voting or quorum requirement for the
board must comply with Article III, section 3.08, and for the stockholders, must
comply with Article II, section 2.09.
The corporation's stockholders may amend or repeal the corporation's
bylaws even though the bylaws may also be amended or repealed by its board of
directors.
ARTICLE XI. FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors in consultation with the financial and tax advisors of the
corporation.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that such person is the secretary
of Aradyme Development Corporation, a corporation duly organized and existing
under and by virtue of the laws of the state of Utah; that the above and
foregoing bylaws of said corporation were duly and regularly adopted as such by
the board of directors of said corporation by unanimous consent dated February
14, 2006; and that the above and foregoing bylaws are now in full force and
effect and supersede and replace any prior bylaws of the corporation.
DATED this 14th day of February, 2006.
/s/ Merwin D. Rasmussen
---------------------------------
Merwin D. Rasmussen, Secretary
Adopted February 14, 2006 21
Appendix D
ARADYME CORPORATION
2006 LONG-TERM INCENTIVE PLAN
Aradyme Corporation, a Delaware corporation (the "Company"), hereby
adopts this "2006 Long-Term Incentive Plan" (the "Plan").
1. Purposes of the Plan. The Board has adopted this Plan with the
intent, and directs that it be administered as necessary, to attract and retain
the best available personnel for positions of substantial responsibility;
provide additional incentive to Employees, Directors and Consultants; and
promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees
as shall be administering the Plan in accordance with section 4 of the
Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under the corporate laws of the
state in which the Company is incorporated, federal and state
securities laws, the Code, the regulations and policies of any stock
exchange or quotation system on which the Common Stock is listed or
quoted, and the Applicable Laws of any foreign country or jurisdiction
where Options or Stock Purchase Rights are or will be granted under the
Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means a committee of Directors appointed by
the Board in accordance with section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Aradyme Corporation, a Delaware
corporation.
(h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to
such entity, including, at the discretion of the Administrator, an
entity that is not a natural person.
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. A Service Provider shall not cease to be an Employee in the
case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its
Parent, any Subsidiary, or any successor. For purposes of Incentive
Stock Options, no such leave may exceed 90 days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three months following the 91st day
of such leave, any Incentive Stock Option held by the Optionee shall
cease to be treated as an Incentive Stock Option and shall be treated
for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a Director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) if the Common Stock is listed on any established
stock exchange or a national market system, including the
Nasdaq National Market or the Nasdaq SmallCap Market of the
Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system on
the day of determination, as reported by Nasdaq, The Wall
Street Journal, or such other source as the Administrator
deems reliable;
(ii) if the Common Stock is regularly quoted in an
inter-dealer quotation medium, but selling prices are not
reported, the Fair Market Value of a Share of Common Stock
shall be the mean between the high bid and low asked prices
for the Common Stock on the day of determination, as reported
by such inter-dealer quotation medium, The Wall Street
Journal, or such other source as the Administrator deems
reliable; or
(iii) in the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in
good faith by the Administrator.
(n) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422
of the Code and the regulations promulgated thereunder.
(o) "Inside Director" means a Director who is an Employee.
(p) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(q) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or
Stock Purchase Right grant. The Notice of Grant is part of, and subject
to the terms of, the Option Agreement.
(r) "Officer" means a person who is an executive officer of
the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the
Plan.
2
(t) "Option Agreement" means an agreement between the Company
and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(u) "Option Exchange Program" means a program whereby
outstanding Options are surrendered in exchange for Options with a
lower exercise price.
(v) "Optioned Stock" means the Common Stock subject to an
Option or Stock Purchase Right.
(w) "Optionee" means the holder of an outstanding Option or
Stock Purchase Right granted under the Plan.
(x) "Outside Director" means a Director who meets the
definition of both a "Non-Employee Director" (as defined in Rule 16b-3
of the Exchange Act) and "Outside Director" (as defined in Section
162(m) of the Code).
(y) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(z) "Plan" means this 2006 Long-Term Incentive Plan, as the
same may be amended and restated from time to time.
(aa) "Restricted Stock" means Shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under section 11 of the
Plan.
(bb) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right.
The Restricted Stock Purchase Agreement is subject to the terms and
conditions of the Plan and the Notice of Grant.
(cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Plan.
(dd) "Section 16(b)" means Section 16(b) of the Exchange Act.
(ee) "Service Provider" means an Employee, Director or
Consultant.
(ff) "Share" means a share of Common Stock, as adjusted in
accordance with section 15 of the Plan.
(gg) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to section 11 of the Plan, as evidenced by a Notice of
Grant.
(hh) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of section 15
of the Plan, the maximum aggregate number of Shares on which Options may be
3
granted and which may be sold on the exercise of such Options and under
Restricted Stock Purchase Agreements under the Plan is 3,000,000 Shares. The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares that were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) The Board may designate different Committees to
administer the Plan with respect to different groups of
Service Providers.
(ii) To the extent that the Administrator determines
it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a
Committee of two or more "Outside Directors" within the
meaning of Section 162(m) of the Code.
(iii) To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.
(iv) Other than as provided above, the Plan shall be
administered by the Board or a Committee, which Committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator
shall have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options
and Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of Shares of Common
Stock to be covered by each Option and Stock Purchase Right
granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or
Stock Purchase Right granted hereunder. Such terms and
conditions include the exercise price, the time or times when
Options or Stock Purchase Rights may be exercised (which may
be based on performance criteria), any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or
4
limitation regarding any Option or Stock Purchase Right or the
Shares of Common Stock relating thereto, based in each case on
such factors as the Administrator, in its sole discretion,
shall determine;
(vi) to reduce the exercise price of any Option or
Stock Purchase Right to the then-current Fair Market Value if
the Fair Market Value of the Common Stock covered by such
Option or Stock Purchase Right shall have declined since the
date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan;
(ix) to establish, amend and rescind rules and
regulations relating to the Plan, including rules and
regulations relating to subplans established for the purpose
of satisfying applicable foreign laws;
(x) to modify or amend each Option or Stock Purchase
Right (subject to section 17(c) of the Plan), including the
discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise
provided for in the Plan;
(xi) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an
Option or Stock Purchase Right previously granted by the
Administrator;
(xii) to correct any defect, supply any omission, or
reconcile any inconsistency in the Plan or in any Option
Agreement, in a manner and to the extent it shall deem
necessary, all of which determinations and interpretations
made by the Administrator shall be conclusive and binding on
all Optionees, any other holders of Options, and on their
legal representatives and beneficiaries;
(xiii) except to the extent prohibited by or
impermissible in order to obtain treatment desired by the
Administrator under Applicable Law or rule, to allocate or
delegate all or any portion of its powers and responsibilities
to any one or more of its members or to any person(s) selected
by it, subject to revocation or modification by the
Administrator of such allocation or delegation; and
(xiv) to make all other determinations deemed
necessary or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and
binding on all Optionees and any other holders of Options or Stock
Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Service Providers. Incentive Stock Options may be granted only
to Employees.
5
6. Limitations.
(a) Designation. Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designation, to the extent that
the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the
Optionee during any calendar year (under all Plans of the Company and
any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this section
6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall
be determined as of the time the Option with respect to such Shares is
granted.
(b) No Right of Continuing Service or Employment. Neither the
Plan nor any Option or Stock Purchase Right shall confer upon an
Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right
to terminate such relationship at any time, with or without cause.
7. Term of Plan. Subject to section 21 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of 10 years unless terminated earlier under section 17 of the Plan.
8. Term of Option. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall be 10
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five years from the date of grant or such shorter term as
may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be
determined by the Administrator and specified in the Option Agreement,
subject to the following:
(i) In the case of an Incentive Stock Option:
(1) granted to an Employee who, at the time
the Incentive Stock Option is granted, owns stock
representing more than 10% of the voting power of all
classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on
the date of grant.
(2) granted to any Employee other than an
Employee described in subsection 9(a)(i)(1)
immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the
per Share exercise price shall be determined by the
Administrator. In the case of a Nonstatutory Stock Option
intended to qualify as "performance-based compensation" within
6
the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market
Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of
the Fair Market Value per Share on the date of grant pursuant
to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option
is granted, the Administrator shall fix the period within which the
Option may be exercised and shall determine any conditions that must be
satisfied before the Option may be exercised.
(c) Form of Consideration. The Administrator shall determine
the acceptable form of consideration for exercising an Option,
including the method of payment. In the case of an Incentive Stock
Option, the Administrator shall determine the acceptable form of
consideration at the time of grant as set forth in the Option
Agreement. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares, provided Shares acquired from the
Company have been owned by the Optionee for more than six
months on the date of surrender and have a Fair Market Value
on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in
connection with the Plan;
(vi) a reduction in the amount of any Company
liability to the Optionee, including any liability
attributable to the Optionee's participation in any
Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of
payment; or
(viii) such other consideration and method of payment
for the issuance of Shares to the extent permitted by
Applicable Laws.
Notwithstanding the form of consideration determined by the
Administrator at the time of grant, the Administrator shall have the
authority, in its sole and absolute discretion, to accept other forms
of consideration as the method of payment.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable according to the terms of
the Plan and at such times and under such conditions as determined by
the Administrator and set forth in the Option Agreement. Unless the
Administrator provides otherwise, vesting of Options granted hereunder
shall be tolled during any unpaid leave of absence. An Option may not
7
be exercised for a fraction of a Share. An Option shall be deemed
exercised when the Company receives: (i) written or electronic notice
of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist
of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan.
Shares issued upon exercise of an Option shall be issued in the name of
the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse or in the name of a family trust of
which the Optionee is a trustee. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such Shares
promptly after the Option is exercised; provided that if the Company
shall be advised by counsel that certain requirements under the
federal, state or foreign securities laws must be met before Shares may
be issued under this Plan, the Company shall notify all persons who
have been issued Options, and the Company shall have no liability for
failure to issue Shares under any exercise of Options because of delay
while such requirements are being met or the inability of the Company
to comply with such requirements. No adjustment will be made for a
dividend or other right for which the record date is prior to the date
the Shares are issued, except as provided in section 15 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the
Optionee's death or Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option
Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of
such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain
exercisable for three months following the Optionee's termination. If,
on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee
may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent the Option is vested on
the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the
absence of a specified time in the Option Agreement, the Option shall
remain exercisable for 12 months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee
does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement (but in no event later than the
expiration of the term of such Option as set forth in the Notice of
Grant), by the Optionee's estate or by a person who acquires the right
to exercise the Option by bequest or inheritance, but only to the
extent that the Option is vested on the date of death. In the absence
of a specified time in the Option Agreement, the Option shall remain
8
exercisable for 12 months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the
person(s) entitled to exercise the Option under the Optionee's will or
the laws of descent or distribution. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under
the Plan, it shall advise the offeree in writing or electronically, by
means of a Notice of Grant, of the terms, conditions and restrictions
related to the offer, including the number of Shares that the offeree
shall be entitled to purchase, the price to be paid, and the time
within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the
Company a repurchase option exercisable upon the voluntary or
involuntary termination of the purchaser's service with the Company for
any reason (including death or Disability). The purchase price for
Shares repurchased pursuant to the Restricted Stock Purchase Agreement
shall be the original price paid by the purchaser plus interest at the
rate of 10% per year from the date of the original purchase and may be
paid by cancellation of any indebtedness of the purchaser to the
Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in
its sole discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder and shall be a stockholder when his or her purchase is
entered upon the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Stock Purchase Right is
exercised, except as provided in section 15 of the Plan.
12. Withholding. If the grant or exercise of an Option or a Stock
Purchase Right pursuant to this Plan, or any other event in connection with any
such grant or exercise, creates an obligation to withhold income and employment
taxes pursuant to the Applicable Laws, such obligation may, at the sole and
absolute discretion of the Administrator at the time of the grant of the Option
or Stock Purchase Right and to the extent permitted by the terms of the Option
or Stock Purchase Right and the then-governing provisions of the Code and the
Exchange Act, be satisfied (a) by the holder of the Option or Stock Purchase
Right delivering to the Company an amount of cash equal to such withholding
obligation; (b) by the Company withholding from any compensation or other amount
owing to the holder of the Option or Stock Purchase Right the amount (in cash,
stock or other property as the Company may determine) of the withholding
obligation; (c) by the Company withholding Shares of stock subject to the Option
or Stock Purchase Right with a Fair Market Value equal to such obligation; or
(d) by the holder of the Option or Stock Purchase Right either delivering Shares
of stock that have been owned by the holder for more than six months or
9
canceling Options or other rights to acquire stock from the Company that have
been held for more than six months with a Fair Market Value equal to such
requirements. In all events, delivery of Shares of stock issuable on exercise of
the Option or on grant of the Stock Purchase Right shall be conditioned upon and
subject to the satisfaction or making provision for the satisfaction of the
withholding obligation of the Company resulting from the grant or exercise of
the Option, grant of the Stock Purchase Right, or any other event in accordance
with the foregoing. The Company shall be further authorized to take such other
action as may be necessary, in the opinion of the Company, to satisfy all
obligations for the payment of such taxes.
13. Nontransferability of Options and Stock Purchase Rights.
(a) An Option or Stock Purchase Right may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee, all save and except only (i) an
Optionee's family member who has acquired the Option or Stock Purchase Right
through a gift or a transfer for value pursuant to a domestic relations order in
settlement of marital property rights or a transfer to an entity in which more
that 50% of the voting interests owned by an Optionee's family members or the
Optionee in exchange for an interest in that entity, all as more particularly
provided in the general instructions to Form S-8 or any successor form under the
Securities Act of 1933; or (ii) unless determined otherwise by the
Administrator, in which case such Option or Stock Purchase Right shall contain
such additional terms and conditions as the Administrator deems appropriate.
(b) An Incentive Stock Option may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. An Incentive Stock Option can only be
exercised by Optionee. In the event of the death of Optionee while an eligible
employee of the Company or within three months after termination thereof, this
Option can be exercised by the executor or personal representative of the estate
of Optionee or such other person who has acquired this Option as a bequest or by
inheritance from Optionee.
14. Grants to Directors and Officers. To the extent the Company has a
class of securities registered under Section 12 of the Exchange Act, Options or
Stock Purchase Rights granted under the Plan to Directors and Officers (as used
in Rule 16b-3 promulgated under the Exchange Act or any amendment or successor
rule of like tenor) intended to qualify for the exemption from Section 16(b) of
the Exchange Act provided in Rule 16b-3 shall, in addition to being subject to
the other restrictions and limitations set forth in this Plan, be made as
follows:
(a) Requirements for Grant to Officer or Director. A
transaction whereby there is a grant of an Option or Stock Purchase
Right pursuant to this Plan must satisfy one of the following:
(i) The transaction must be approved by the Board or
duly authorized Committee composed solely of two or more
Outside Directors of the Company.
(ii) The transaction must be approved or ratified, in
compliance with Section 14 of the Exchange Act, by either: (1)
the affirmative vote of the holders of a majority of the
securities of the Company present or represented and entitled
to vote at a meeting of the stockholders of the Company held
in accordance with the Applicable Laws of the state of
incorporation of the Company; or (2) if allowed by applicable
state law, the written consent of the holders of a majority,
or such greater percentage as may be required by Applicable
10
Laws of the state of incorporation of the Company, of the
securities of the Company entitled to vote. If the transaction
is ratified by the stockholders, such ratification must occur
no later than the date of the next annual meeting of
stockholders.
(iii) The stock acquired must be held by the Officer
or Director for a period of six months subsequent to the date
of the grant; provided that if the transaction involves a
derivative security (as defined in Section 16 of the Exchange
Act), this condition shall be satisfied if at least six months
elapse from the date of acquisition of the derivative security
to the date of disposition of the derivative security (other
than on exercise or conversion) or its underlying equity
security.
(b) Approval Required for Disposition of Securities. Any
transaction involving the disposition by the Company of its securities
in connection with Options or Stock Purchase Rights granted pursuant to
this Plan shall:
(i) be approved by the Board or duly authorized
Committee composed solely of two or more Outside Directors; or
(ii) be approved or ratified, in compliance with
Section 14 of the Exchange Act, by either: (1) the affirmative
vote of the holders of a majority of the securities of the
Company present or represented and entitled to vote at a
meeting duly held in accordance with the Applicable Laws of
the state of incorporation of the Company; or (2) if allowed
by applicable state law, the written consent of the holders of
a majority, or such greater percentage as may be required by
Applicable Laws of the state of incorporation of the Company,
of the securities of the Company entitled to vote; provided
that such ratification occurs no later than the date of the
next annual meeting of stockholders.
All of the foregoing restrictions and limitations are based on the governing
provisions of the Exchange Act and the rules and regulations promulgated
thereunder as of the date of adoption of this Plan. If, at any time, the
governing provisions are amended to permit an Option or Stock Purchase Right to
be granted or exercised pursuant to Rule 16b-3 or any amendment or successor
rule of like tenor without one or more of the foregoing restrictions or
limitations, or the terms of such restrictions or limitations are modified, the
Administrator may award Options or Stock Purchase Rights to Directors and
Officers and may modify outstanding Options or Stock Purchase Rights in
accordance with such changes, all to the extent that such action by the
Administrator does not disqualify the Options or Stock Purchase Rights from
exemption under the provisions of Rule 16b-3 or any amendment or successor rule
of similar tenor.
15. Adjustments upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the number of Shares of Common
Stock covered by each outstanding Option and Stock Purchase Right, the
number of Shares of Common Stock that have been authorized for issuance
under the Plan but as to which no Options or Stock Purchase Rights have
yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option or Stock Purchase Right, the
number of Shares that may be added annually to the Shares reserved
under the Plan by the Board (pursuant to section 3), as well as the
price per Share of Common Stock covered by each such outstanding Option
or Stock Purchase Right, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares of Common Stock
11
effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company
shall not be deemed to have been effected without receipt of
consideration within the meaning of the preceding clause. Such
adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of Shares of stock of any
class, or securities convertible into Shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares of Common Stock subject to an
Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall
notify each Optionee as soon as practicable prior to the effective date
of such proposed transaction. The Administrator in its discretion may
provide for an Optionee to have the right to exercise his or her Option
until 10 days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option would not
otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased
upon exercise of an Option or Stock Purchase Right shall lapse as to
all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has
not been previously exercised, an Option or Stock Purchase Right will
terminate immediately prior to the consummation of such proposed
action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially
all of the assets of the Company, each outstanding Option and Stock
Purchase Right shall be assumed or an equivalent Option or right
substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. With respect to Options granted to an
Outside Director pursuant to section 14 that are assumed or substituted
for, if following such assumption or substitution the Optionee's status
as a Director or a director of the successor corporation, as
applicable, is terminated other than upon a voluntary resignation by
the Optionee, then the Optionee shall fully vest in and have the right
to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable.
In the event that the successor corporation refuses to assume
or substitute for the Option or Stock Purchase Right, the Optionee
shall fully vest in and have the right to exercise the Option or Stock
Purchase Right as to all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable. If an Option or
Stock Purchase Right becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets,
the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully
vested and exercisable for a period of 15 days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period.
For the purposes of this subsection, the Option or Stock
Purchase Right shall be considered assumed if, following the merger or
sale of assets, the Option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right immediately prior to the merger or sale of assets,
the consideration (whether stock, cash or other securities or property)
received in the merger or sale of assets by holders of Common Stock for
each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the
merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of
12
the successor corporation, provide for the consideration to be received
upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be
solely common stock of the successor corporation or its Parent equal in
Fair Market Value to the per Share consideration received by holders of
Common Stock in the merger or sale of assets.
16. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
17. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the
rights of any Optionee, unless mutually agreed otherwise between the
Optionee and the Administrator, which agreement must be in writing and
signed by the Optionee and the Company. Termination of the Plan shall
not affect the Administrator's ability to exercise the powers granted
to it hereunder with respect to Options granted under the Plan prior to
the date of such termination.
18. Conditions upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option or Stock Purchase Right unless the exercise
of such Option or Stock Purchase Right and the issuance and delivery of
such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise
of an Option or Stock Purchase Right, the Company may require the
person exercising such Option or Stock Purchase Right to represent and
warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell
or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required.
19. Inability To Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
20. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
21. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within 12 months after the date the Plan is adopted.
Such stockholder approval shall be obtained in the manner and to the degree
required under Applicable Laws.
13
SECRETARY'S CERTIFICATE
The undersigned, the duly constituted and elected secretary of Aradyme
Corporation, hereby certifies that pursuant to a resolution duly adopted by the
stockholders on ______________ __, 2006, in accordance with the requirements of
law and the Company's articles of incorporation and bylaws, the foregoing
Aradyme Corporation 2006 Long-Term Incentive Plan was approved by the
affirmative vote of the holders of a majority of the shares of common stock.
DATED this _____ day of ______________, 2006.
--------------------------
Secretary
14
PROXY
ARADYME CORPORATION
Annual Meeting of the Stockholders of (This Proxy Is Solicited on Behalf
Aradyme Corporation on December 22, 2006 of the Board of Directors)
The undersigned hereby appoints James R. Spencer and Merwin D. Rasmussen
proxies, and each of them, with full power of substitution, to vote all shares
of common stock of ARADYME CORPORATION (the "Company"), that the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company ("Annual
Meeting") to be held at the Company's office in Building Q, Suite 3500, 1255
North Research Way,, Orem, Utah, on December 22, 2006, at 11:00 a.m., local
time, or any adjournment(s) thereof, such proxies being directed to vote as
specified below. If no instructions are specified, such proxy will be voted
"FOR" each proposal.
To vote in accordance with the Board of Directors' recommendations, sign below.
The "FOR" boxes may, but need not, be checked. To vote against any of the
recommendations, check the appropriate box marked "AGAINST" below. To withhold
authority for the proxies to vote on any of the recommendations, check the
appropriate box(es) marked "WITHHOLD AUTHORITY" below.
The Board of Directors recommends votes "FOR" the following proposals, each of
which has been proposed by the Board of Directors:
1. To elect each of the following nominees to serve as a director for a
term expiring at the 2007 Annual Meeting of the Stockholders of the
Company and until a successor is elected and qualified. To withhold
your vote for any individual nominee, strike a line through such
nominee's name.
James R. Spencer Merwin D. Rasmussen Jeffrey S. Bennion
2. To approve the change in domicile of the Company from Delaware to Utah,
to be effected pursuant to an Agreement and Plan of Merger dated
effective February 22, 2006, by and between the Company and Aradyme
Development Corporation, a Utah corporation and a wholly-owned
subsidiary of the Company ("Aradyme Utah"), pursuant to which the
Company will merge with and into Aradyme Utah, and Aradyme Utah will
survive the merger (approval of this change in domicile proposal will
constitute approval of the merger and the Agreement and Plan of
Merger).
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
3. To approve an amendment to the Company's Certificate of Incorporation
to increase the Company's capitalization from 50,000,000 to 150,000,000
shares of common stock. (In the event that Proposal 2 is approved by
the stockholders, this proposal shall be deemed to relate to the
Articles of Incorporation of Aradyme Utah.)
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
4. To approve the Aradyme Corporation 2006 Long-Term Incentive Plan. (In
the event that Proposal 2 is approved by the stockholders, the 2006
Long-Term Incentive Plan shall be deemed adopted by Aradyme Utah.)
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment (s) thereof.
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
Please print your name and sign exactly as your name appears in the records of
the Company. When shares are held by joint tenants, both should sign.
Dated:______________________________
____________________________________ ____________________________________
Signature Signature (if held jointly)
____________________________________ ____________________________________
Print Name Print Name
PLEASE MARK, SIGN, DATE, AND
RETURN THIS PROXY TO: Aradyme Corporation
1255 North Research Way, Suite Q3500
Orem, Utah 84097
Facsimile: 801-705-5001