Document:

PROMISSORY NOTE
                                       OF
                               ARADYME CORPORATION

$125,000                                                           July 14, 2006

         ARADYME CORPORATION, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to EnviroFresh, Inc., dba Eagle Rock Funding,
(the "Noteholder"), or its assigns, the sum of $125,000, together with two
percent points, (2%) and interest from the date of this note at a rate of twelve
percent, (12.00%) per annum on the unpaid balance, payable as follows:

Two percent points (2%) and twelve percent, (12.00%) per annum interest for the
first thirty days at which time the entire unpaid balance, together with all
outstanding accrued interest, fees and charges will be due and payable in full
to Noteholder. At the option of the Noteholder, a thirty (30) day extension
(Extension Period) may be offered for the payment of two percent (2%) of the
outstanding balance due to holder at the end of the initial thirty-day period.
If the Extension Period is exercised by both the Company and Noteholder then at
the end of said 30 day Extension Period the entire unpaid balance, together with
all outstanding accrued interest, fees and charges will be due and payable in
full to Noteholder, in lawful money of the United States of America, negotiable
and payable at the office of Noteholder without defalcation or discount.

At the option of the Noteholder, an additional thirty (30) day extension may be
offered for the payment of two percent (2%) of the outstanding balance due the
Noteholder, then at the end of said 30 day Extension Period the entire balance,
together with all outstanding accrued interest, fees and charges will be due and
payable in full to Noteholder, in lawful money of the United States of America,
negotiable and payable at the office of the Noteholder without defalcation or
discount.

All payments herein above provided for shall be applied first on accrued
interest and balance or reduction of principal. Any installments of principal
and interest not paid when due shall, at the option of the Noteholder hereof,
bear interest thereafter the due date at a rate of thirty six percent (36.00%)
per annum until paid in full in accordance with this promissory note (the
"Note"). The principal amount of this Note and the interest accrued thereon
shall be payable at the principal offices of the Noteholder or by mail to the
registered address of the Noteholder.

Additionally, as a requirement of this loan and pursuant to the agreement
entitled Modification and Documentation of Obligations dated 29th day of
September, 2003 between Aradyme Corporation and EnviroFresh, Inc., item 2 of
page 2, Aradyme agrees to create a second identical complete backup of the
company's current technology as defined therein. This ongoing backup of the
technology will continue until either EnviroFresh, Inc. exercises its right to
the technology or until the rights expiration date of May 1, 2007. This backup
procedure should be a part of the Company's standard operating procedures
currently in place and the backup copy delivered regularly to a mutually agreed
escrow account or mutually agreed third party location to guarantee the rights
as described in said agreement. This backup system needs to be implemented on or
before July 21, 2006.

The following is a statement of the rights of the Noteholder and the conditions
to which this Note is subject and to which the Noteholder hereof, by the
acceptance of this Note, agrees:

         1. Definitions. The following definitions shall apply for all purposes
of this Note:

                  1.1 "Company" shall mean the Company as defined above and
includes any corporation that shall succeed to or assume the obligations of the
Company under this Note.

                  1.2 "Noteholder" or similar term, when the context refers to a
holder of this Note, shall mean any person who shall at the time be the
registered holder of this Note.

         2. Payment. The Company shall have the right at any time to prepay any
or all of the principal amount or accrued interest on this Note prior to the
maturity date of the Note.

         3. Default. The Company will be in default if the Company fails to make
any payment when due hereunder. The Company will also be in default if any of
the following occurs and such default is not cured within a 10-day period after
the Noteholder has given the Company written notice of such default:

                  (a) the Company breaches any material obligation to the
Noteholder hereunder;

                  (b) a receiver is appointed for any part of the Company's
         property, the Company makes an assignment for the benefit of creditors,
         or any proceeding is commenced either by the Company or against the
         Company under any bankruptcy or insolvency laws; or

                  (c) the Company suspends its normal business operations or
         otherwise fails to continue to operate its business in the ordinary
         course.

         4. Waiver and Amendment. Any provision of this Note may be amended,
waived, modified, discharged, or terminated solely upon the written consent of
both the Company and the Noteholder.

         5. Assignment; Binding upon Successors and Assigns. The Company may not
assign any of its obligations hereunder without the prior written consent of
Noteholder. The terms and conditions of this Note shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties.

         6. Waiver of Notice; Attorneys' Fees. The Company and all endorsers of
this Note hereby waive notice, demand, notice of nonpayment, presentment,
protest, and notice of dishonor. If any action at law or in equity is necessary
to enforce this Note or to collect payment under this Note, the Noteholder shall
be entitled to recover, as an element of the costs of suit and not as damages,
reasonable attorney's fees, costs, and necessary disbursements in addition to
any other relief to which it may be entitled.

         7. Construction of Note. The terms of this Note have been negotiated by
the Company, the original Noteholder, and their respective attorneys, and the
language hereof will not be construed for or against either the Company or the
Noteholder. Unless otherwise explicitly set forth, a reference to a section will
mean a section in this Note. The titles and headings herein are for reference
purposes only and will not in any manner limit the construction of this Note,
which will be considered as a whole.

         8. Notices. Any notice, demand, request or other communication
permitted or required under this Note shall be in writing and shall be deemed to
have been given (a) as of the date so delivered if personally served; (b) as of
the date so sent if transmitted by facsimile and receipt is confirmed by the
facsimile operator of the recipient; (c) as of the date of sent if sent by
electronic mail and receipt is acknowledged by the recipient; (d) one day after
the date so sent if delivered by overnight courier service; or (e) three days
after the date so mailed if mailed by certified mail, return receipt requested,
addressed as follows:

         To the Company, as follows:                 Aradyme Corporation
                                                     Attn. General Counsel
                                                     1255 North Research Way, Suite Q3500
                                                     Orem, Utah 84097
                                                     Telephone:  (801) 705-5000
                                                     Facsimile:  (801) 705-5001
                                                     E-mail: scott.mayfield@aradyme.com

                                       2

         To the Noteholder, as follows:              EnviroFresh, Inc., dba Eagle Rock Funding
                                                     5722 South 1300 West, Salt Lake City, Utah  84123
                                                     Telephone:  (801) 263-2376
                                                     Facsimile:  (___) ___-_______
                                                     E-mail: mdrasmussen@msn.com

or such other addresses, facsimile numbers, or electronic mail address as shall
be furnished in writing by any party in the manner for giving notices hereunder.

         9. Governing Law. This Note shall be governed by and construed under
the internal laws of the United States and the state of Utah as applied to
agreements among Utah residents entered into and to be performed entirely within
Utah, without reference to principles of conflict of laws or choice of laws.

         IN WITNESS WHEREOF, the Company has caused this Note to be signed in
its name as of the date first above written.

                                                   ARADYME CORPORATION

                                                   By /s/ James R. Spencer              
                                                   James R. Spencer, Chairman & CEO

                                       3FORM OF NOTE

Exhibit 4.1

THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS 10% CONVERTIBLE NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.  THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION OR (II) AN EXEMPTION FROM THE ACT IS AVAILABLE AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.

10% SENIOR SECURED CONVERTIBLE NOTE

$250,000

June 1, 2006

For value received, Validian Corporation, a Nevada corporation (together with its successors and assigns, the “Company”), with an address at 30 Metcalfe Street, Ottawa, Ontario, Canada K1P 5L4, promises to pay to Leon Frenkel (the “Holder”) with an address at 1600 Flat Rock Road, Penn Valley, PA 19072, the principal amount of Two Hundred-Fifty Thousand Dollars ($250,000) and to pay interest thereon, all as hereinafter specified. This Note amends and restates that certain Convertible Note made by the Company in favor of Holder, dated May 11, 2006 (the “Former Note”), and renders the Former Note terminated, cancelled, void and without legal force and effect.

1.

Identification of Note.  This Note is issued as part of the Holder’s investment into the Company.

2.

Maturity.  

2.1

Maturity Date.  Unless earlier converted as provided in Section 3 hereof, this Note will automatically mature and be due and payable on the earlier of (a) the first (1st) anniversary of the date hereof (the “Maturity Date”) or (b) the occurrence of an Event of Default (as defined in Section 7 hereof).

2.2

Interest.  Interest shall accrue from the date of this Note on the unpaid principal amount at a rate equal to ten percent (10%) per annum, computed on the basis of the actual number of days elapsed and a year of 365 days from the date of this Note until the principal amount and all interest accrued thereon are paid (or converted, as provided in Section 3 hereof).  Subject to Section 3, interest shall be due and paid to the Holder quarterly, with the first interest payment paid on September 1, 2006.

2.3

Prepayment.  The Company shall have the right at its option at any time prior to the conversion described in Section 3, to prepay this Note, in whole or in part without premium or penalty, provided the Company provide written notice to the Holder within thirty (30) days of 

the prepayment (the “Prepayment Notice”) and permit the Holder to convert this Note, within ten (10) business days of receiving the Prepayment Notice, in accordance with Section 3.2.  Any prepayment of this Note shall be accompanied by the interest on the prepaid principal amount accrued to the date of prepayment.

2.4

  Security Agreement.  This Note is secured by that certain Security Agreement, dated June 1, 2006, and attached hereto as Exhibit A.

2.5

Right of Holder to demand Payment of Note.  If the Company raises Five Hundred Thousand Dollars ($500,000) or more from the date hereof, Holder shall have the right to demand payment of fifty percent (50%) of the Outstanding Amount of the Note, including the interest related thereto. 

3.

Conversion.

3.1

Voluntary Conversion.  The holder may voluntarily convert the Note into Common Stock of the Company at any time.

3.2

Mechanics and Effect of Conversion. 

(a)

The principal and interest of this Note shall convert into shares of Common Stock at a conversion price of ten cents ($0.10) per share (“Conversion Price”).

(b)

No fractional shares will be issued upon conversion of this Note.  In lieu of any fractional shares to which the Holder would otherwise be entitled, the Company will pay to the Holder in cash the unconverted amount that would otherwise be converted into such fractional shares. 

(c)

In the event that the Outstanding Amount under this Note is converted into Common Stock pursuant to Section 3.1 hereof, the Holder shall surrender this Note, duly endorsed, to the Company and the Note shall thereupon be canceled.  At its expense, the Company will issue and deliver to such Holder, a certificate or certificates representing the number of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock to which such Holder is entitled upon such conversion, together with a check payable to the Holder for any cash amounts payable pursuant to Section 3.2(b) hereof. 

(d)

Unless a registration statement under the Securities Act of 1933, as amended, with respect to the shares of Common Stock issued upon conversion of this Note has been filed with the Securities and Exchange Commission, each share issued upon conversion of this Note shall be stamped or otherwise imprinted with a legend substantially in the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE 1933 

2

ACT AND SUCH LAWS OR AN EXCEPTION FROM REGISTRATION IS AVAILABLE.”

(e)

Upon conversion of this Note in accordance with Section 3 hereof, all rights with respect to this Note shall terminate, whether or not the Note has been surrendered for cancellation, and the Company will be forever released from all of its obligations and liabilities under this Note except its obligations pursuant to Section 3.2(c) hereof, except if Holder partially converts the Note pursuant to Section 3 hereof, whereby all rights with respect to the portion of the Note that has been converted will terminate pursuant to this Section 3.2 (e), but the remainder Note will possess all of the rights granted in this Note..

4.

Registration Rights.  After 120 days have elapsed from the date hereof, Holder shall have demand registration rights, enabling Holder to demand that the Company use commercially reasonable efforts to file a registration statement with the Securities and Exchange Commission, which includes the shares received by Holder pursuant to Section 3 hereof, as soon as reasonably practicable, but no later than 120 days after receipt of such demand registration rights, provided that from the date herof until the date Holder receives demand registration rights, Holder shall have piggy-back rights with respect to any registration statement filed by the Company.  The Company shall bear the full cost of filing the registration statement pursuant to a demand by Holder.

5.

Payment.  Except as set forth herein, all payments shall be made in lawful money of the United States of America at the principal offices of the Holder.  Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.

6.

Subordination.  No indebtedness shall be senior in any respect to this Note without the prior written consent of the Holder.  To the extent bankruptcy proceedings are initiated by the Company or a third party, the Holder shall receive the same percentage of ownership pari-passu as the Holder would have under Section 3 hereof, regardless of any bankruptcy protection afforded to the Company.

7.

Events of Default.  The entire unpaid Outstanding Amount shall become immediately due and payable upon the occurrence of an Event of Default.  An “Event of Default” shall be deemed to have occurred if:

(a)

the Company shall: (i) be unable, or admit in writing its inability, to pay its debts as they mature; (ii) make a general assignment for the benefit of creditors; (iii) be adjudicated a bankrupt or insolvent; (iv) file a voluntary petition in bankruptcy, or a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any insolvency law, or an answer admitting the material allegations of a bankruptcy, reorganization or insolvency petition filed against it; (v) take corporate action for the purpose of effecting any of the foregoing; or (vi) have an order for relief entered against it in any proceeding under the United States Bankruptcy Code; 

(b)

an order, judgment or decree shall be entered, without the application, approval or consent of the Company by any court of competent jurisdiction, approving a petition seeking reorganization of the Company or appointing a receiver, trustee or liquidator of the 

3

Company or of all or a substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of thirty (30) consecutive days; or

(c)

the Company shall fail to pay as and when due any principal or interest hereunder and such nonpayment shall continue uncured for a period of ten (10) business days after written notice by the Holder thereof.

8.

Transfer; Successors and Assigns.  This Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company.  Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name, of, the transferee.  Interest and principal are payable only to the registered holder of this Note.  The terms and conditions of this Note shall inure to the benefit of and binding upon the respective successors and assigns of the parties.  

9.

Governing Law.  This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law and choice of law that would cause the laws of any other jurisdiction to apply.  

10.

Notices.  Whenever any notice is required to be given by the Company to a Holder, such notice shall be sent in writing via first class mail, postage prepaid, to the Holder at the Holder’s last address appearing on the books maintained by the Company for registration, which notice shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  Whenever any notice is required to be given by the Holder of this Note to the Company, such notice shall be sent in writing via first class mail, postage prepaid, to the Company at the Company’s address above.

11.

Amendments and Waivers.  This Note and any term hereof may be amended, waived, discharged or terminated only by an instrument in writing signed by the party against whom enforcement of such amendment, waiver, discharge or termination is sought.  No waivers of any term, condition or provision of this Note, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

12.

Immunity of Members, Officers, Directors and Employees.  No recourse shall be had for the payment of the principal or interest on this Note or for any claim based thereon or otherwise in any manner in respect thereof, to or against any subsidiary, member, officer, director or employee, as such, past, present or future, of the Company or any respective subsidiary, member, officer, director or employees, as such, past, present or future, of any predecessor or successor company, either directly or through the Company or such predecessor or successor company, whether by virtue of any constitutional provision or statute or rule of law, or by the enforcement of any assessment or penalty, or in any other manner, all such liability being expressly waived and released by the acceptance of this Note and as part of the consideration for the issuance thereof.

[Signature on Following Page]

4

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and delivered by its authorized officer, as of the date first above written.

VALIDIAN CORPORATION

/s/ Bruce Benn

By:                                                                 

       Name:  Bruce Benn

       Title:    Chief Executive Officer

/s/ Ronald I Benn

By:__________________________________  

      Name: Ronald I Benn

      Title:   Chief Financial Officer

5

THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS 10% CONVERTIBLE NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.  THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION OR (II) AN EXEMPTION FROM THE ACT IS AVAILABLE AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.

10% SENIOR SECURED CONVERTIBLE NOTE

$120,000

June 1, 2006

For value received, Validian Corporation, a Nevada corporation (together with its successors and assigns, the “Company”), with an address at 30 Metcalfe Street, Ottawa, Ontario, Canada K1P 5L4, promises to pay to Triage Capital Management, L.P. (the “Holder”) with an address at 401 City Line Avenue, Bala Cynwyd, PA 19004, the principal amount of One Hundred Thirty Thousand Dollars ($120,000) and to pay interest thereon, all as hereinafter specified. 

1.

Identification of Note.  This Note is issued as part of the Holder’s investment into the Company.

2.

Maturity.  

2.1

Maturity Date.  Unless earlier converted as provided in Section 3 hereof, this Note will automatically mature and be due and payable on the earlier of (a) the first (1st) anniversary of the date hereof (the “Maturity Date”) or (b) the occurrence of an Event of Default (as defined in Section 7 hereof).

2.2

Interest.  Interest shall accrue from the date of this Note on the unpaid principal amount at a rate equal to ten percent (10%) per annum, computed on the basis of the actual number of days elapsed and a year of 365 days from the date of this Note until the principal amount and all interest accrued thereon are paid (or converted, as provided in Section 3 hereof).  Subject to Section 3, interest shall be due and paid to the Holder quarterly, with the first interest payment paid on September 1, 2006.

2.3

Prepayment.  The Company shall have the right at its option at any time prior to the conversion described in Section 3, to prepay this Note, in whole or in part without premium or penalty, provided the Company provide written notice to the Holder within thirty (30) days of the prepayment (the “Prepayment Notice”) and permit the Holder to convert this Note, within ten (10) business days of receiving the Prepayment Notice, in accordance with Section 3.2.  Any 

6

prepayment of this Note shall be accompanied by the interest on the prepaid principal amount accrued to the date of prepayment.

2.4

  Security Agreement.  This Note is secured by that certain Security Agreement, dated June 1, 2006, and attached hereto as Exhibit A.

2.5

Right of Holder to demand Payment of Note.  If the Company raises Five Hundred Thousand Dollars ($500,000) or more from the date hereof, Holder shall have the right to demand payment of fifty percent (50%) of the Outstanding Amount of the Note, including the interest related thereto. 

3.

Conversion.

3.1

Voluntary Conversion.  The holder may voluntarily convert the Note into Common Stock of the Company at any time.

3.2

Mechanics and Effect of Conversion. 

(a)

The principal and interest of this Note shall convert into shares of Common Stock at a conversion price of ten cents ($0.10) per share (“Conversion Price”).

(b)

No fractional shares will be issued upon conversion of this Note.  In lieu of any fractional shares to which the Holder would otherwise be entitled, the Company will pay to the Holder in cash the unconverted amount that would otherwise be converted into such fractional shares. 

(c)

In the event that the Outstanding Amount under this Note is converted into Common Stock pursuant to Section 3.1 hereof, the Holder shall surrender this Note, duly endorsed, to the Company and the Note shall thereupon be canceled.  At its expense, the Company will issue and deliver to such Holder, a certificate or certificates representing the number of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock to which such Holder is entitled upon such conversion, together with a check payable to the Holder for any cash amounts payable pursuant to Section 3.2(b) hereof. 

(d)

Unless a registration statement under the Securities Act of 1933, as amended, with respect to the shares of Common Stock issued upon conversion of this Note has been filed with the Securities and Exchange Commission, each share issued upon conversion of this Note shall be stamped or otherwise imprinted with a legend substantially in the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE 1933 ACT AND SUCH LAWS OR AN EXCEPTION FROM REGISTRATION IS AVAILABLE.”

7

(e)

Upon conversion of this Note in accordance with Section 3 hereof, all rights with respect to this Note shall terminate, whether or not the Note has been surrendered for cancellation, and the Company will be forever released from all of its obligations and liabilities under this Note except its obligations pursuant to Section 3.2(c) hereof, except if Holder partially converts the Note pursuant to Section 3 hereof, whereby all rights with respect to the portion of the Note that has been converted will terminate pursuant to this Section 3.2 (e), but the remainder Note will possess all of the rights granted in this Note..

4.

Registration Rights.  After 120 days have elapsed from the date hereof, Holder shall have demand registration rights, enabling Holder to demand that the Company use commercially reasonable efforts to file a registration statement with the Securities and Exchange Commission, which includes the shares received by Holder pursuant to Section 3 hereof, as soon as reasonably practicable, but no later than 120 days after receipt of such demand registration rights, provided that from the date herof until the date Holder receives demand registration rights, Holder shall have piggy-back rights with respect to any registration statement filed by the Company.  The Company shall bear the full cost of filing the registration statement pursuant to a demand by Holder.

5.

Payment.  Except as set forth herein, all payments shall be made in lawful money of the United States of America at the principal offices of the Holder.  Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.

6.

Subordination.  No indebtedness shall be senior in any respect to this Note without the prior written consent of the Holder.  To the extent bankruptcy proceedings are initiated by the Company or a third party, the Holder shall receive the same percentage of ownership pari-passu as the Holder would have under Section 3 hereof, regardless of any bankruptcy protection afforded to the Company.

7.

Events of Default.  The entire unpaid Outstanding Amount shall become immediately due and payable upon the occurrence of an Event of Default.  An “Event of Default” shall be deemed to have occurred if:

(a)

the Company shall: (i) be unable, or admit in writing its inability, to pay its debts as they mature; (ii) make a general assignment for the benefit of creditors; (iii) be adjudicated a bankrupt or insolvent; (iv) file a voluntary petition in bankruptcy, or a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any insolvency law, or an answer admitting the material allegations of a bankruptcy, reorganization or insolvency petition filed against it; (v) take corporate action for the purpose of effecting any of the foregoing; or (vi) have an order for relief entered against it in any proceeding under the United States Bankruptcy Code; 

(b)

an order, judgment or decree shall be entered, without the application, approval or consent of the Company by any court of competent jurisdiction, approving a petition seeking reorganization of the Company or appointing a receiver, trustee or liquidator of the Company or of all or a substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of thirty (30) consecutive days; or

8

(c)

the Company shall fail to pay as and when due any principal or interest hereunder and such nonpayment shall continue uncured for a period of ten (10) business days after written notice by the Holder thereof.

8.

Transfer; Successors and Assigns.  This Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company.  Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name, of, the transferee.  Interest and principal are payable only to the registered holder of this Note.  The terms and conditions of this Note shall inure to the benefit of and binding upon the respective successors and assigns of the parties.  

9.

Governing Law.  This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law and choice of law that would cause the laws of any other jurisdiction to apply.  

10.

Notices.  Whenever any notice is required to be given by the Company to a Holder, such notice shall be sent in writing via first class mail, postage prepaid, to the Holder at the Holder’s last address appearing on the books maintained by the Company for registration, which notice shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  Whenever any notice is required to be given by the Holder of this Note to the Company, such notice shall be sent in writing via first class mail, postage prepaid, to the Company at the Company’s address above.

11.

Amendments and Waivers.  This Note and any term hereof may be amended, waived, discharged or terminated only by an instrument in writing signed by the party against whom enforcement of such amendment, waiver, discharge or termination is sought.  No waivers of any term, condition or provision of this Note, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

12.

Immunity of Members, Officers, Directors and Employees.  No recourse shall be had for the payment of the principal or interest on this Note or for any claim based thereon or otherwise in any manner in respect thereof, to or against any subsidiary, member, officer, director or employee, as such, past, present or future, of the Company or any respective subsidiary, member, officer, director or employees, as such, past, present or future, of any predecessor or successor company, either directly or through the Company or such predecessor or successor company, whether by virtue of any constitutional provision or statute or rule of law, or by the enforcement of any assessment or penalty, or in any other manner, all such liability being expressly waived and released by the acceptance of this Note and as part of the consideration for the issuance thereof.

[Signature on Following Page]

9

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and delivered by its authorized officer, as of the date first above written.

VALIDIAN CORPORATION

/s/ Bruce Benn

By:                                                                 

       Name:  Bruce Benn

       Title:    Chief Executive Officer

/s/ Ronald I Benn

By:__________________________________  

      Name: Ronald I Benn

      Title:   Chief Financial Officer

10

THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS 10% CONVERTIBLE NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.  THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF.  THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION OR (II) AN EXEMPTION FROM THE ACT IS AVAILABLE AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.

10% SENIOR SECURED CONVERTIBLE NOTE

$130,000

June 1, 2006

For value received, Validian Corporation, a Nevada corporation (together with its successors and assigns, the “Company”), with an address at 30 Metcalfe Street, Ottawa, Ontario, Canada K1P 5L4, promises to pay to Triage Capital Management B, L.P. (the “Holder”) with an address at 401 City Line Avenue, Bala Cynwyd, PA 19004, the principal amount of One Hundred Thirty Thousand Dollars ($130,000) and to pay interest thereon, all as hereinafter specified. 

1.

Identification of Note.  This Note is issued as part of the Holder’s investment into the Company.

2.

Maturity.  

2.1

Maturity Date.  Unless earlier converted as provided in Section 3 hereof, this Note will automatically mature and be due and payable on the earlier of (a) the first (1st) anniversary of the date hereof (the “Maturity Date”) or (b) the occurrence of an Event of Default (as defined in Section 7 hereof).

2.2

Interest.  Interest shall accrue from the date of this Note on the unpaid principal amount at a rate equal to ten percent (10%) per annum, computed on the basis of the actual number of days elapsed and a year of 365 days from the date of this Note until the principal amount and all interest accrued thereon are paid (or converted, as provided in Section 3 hereof).  Subject to Section 3, interest shall be due and paid to the Holder quarterly, with the first interest payment paid on September 1, 2006.

2.3

Prepayment.  The Company shall have the right at its option at any time prior to the conversion described in Section 3, to prepay this Note, in whole or in part without premium or penalty, provided the Company provide written notice to the Holder within thirty (30) days of the prepayment (the “Prepayment Notice”) and permit the Holder to convert this Note, within ten (10) business days of receiving the Prepayment Notice, in accordance with Section 3.2.  Any 

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prepayment of this Note shall be accompanied by the interest on the prepaid principal amount accrued to the date of prepayment.

2.4

  Security Agreement.  This Note is secured by that certain Security Agreement, dated June 1, 2006, and attached hereto as Exhibit A.

2.5

Right of Holder to demand Payment of Note.  If the Company raises Five Hundred Thousand Dollars ($500,000) or more from the date hereof, Holder shall have the right to demand payment of fifty percent (50%) of the Outstanding Amount of the Note, including the interest related thereto. 

3.

Conversion.

3.1

Voluntary Conversion.  The holder may voluntarily convert the Note into Common Stock of the Company at any time.

3.2

Mechanics and Effect of Conversion. 

(a)

The principal and interest of this Note shall convert into shares of Common Stock at a conversion price of ten cents ($0.10) per share (“Conversion Price”).

(b)

No fractional shares will be issued upon conversion of this Note.  In lieu of any fractional shares to which the Holder would otherwise be entitled, the Company will pay to the Holder in cash the unconverted amount that would otherwise be converted into such fractional shares. 

(c)

In the event that the Outstanding Amount under this Note is converted into Common Stock pursuant to Section 3.1 hereof, the Holder shall surrender this Note, duly endorsed, to the Company and the Note shall thereupon be canceled.  At its expense, the Company will issue and deliver to such Holder, a certificate or certificates representing the number of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock to which such Holder is entitled upon such conversion, together with a check payable to the Holder for any cash amounts payable pursuant to Section 3.2(b) hereof. 

(d)

Unless a registration statement under the Securities Act of 1933, as amended, with respect to the shares of Common Stock issued upon conversion of this Note has been filed with the Securities and Exchange Commission, each share issued upon conversion of this Note shall be stamped or otherwise imprinted with a legend substantially in the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE 1933 ACT AND SUCH LAWS OR AN EXCEPTION FROM REGISTRATION IS AVAILABLE.”

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(e)

Upon conversion of this Note in accordance with Section 3 hereof, all rights with respect to this Note shall terminate, whether or not the Note has been surrendered for cancellation, and the Company will be forever released from all of its obligations and liabilities under this Note except its obligations pursuant to Section 3.2(c) hereof, except if Holder partially converts the Note pursuant to Section 3 hereof, whereby all rights with respect to the portion of the Note that has been converted will terminate pursuant to this Section 3.2 (e), but the remainder Note will possess all of the rights granted in this Note..

4.

Registration Rights.  After 120 days have elapsed from the date hereof, Holder shall have demand registration rights, enabling Holder to demand that the Company use commercially reasonable efforts to file a registration statement with the Securities and Exchange Commission, which includes the shares received by Holder pursuant to Section 3 hereof, as soon as reasonably practicable, but no later than 120 days after receipt of such demand registration rights, provided that from the date herof until the date Holder receives demand registration rights, Holder shall have piggy-back rights with respect to any registration statement filed by the Company.  The Company shall bear the full cost of filing the registration statement pursuant to a demand by Holder.

5.

Payment.  Except as set forth herein, all payments shall be made in lawful money of the United States of America at the principal offices of the Holder.  Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.

6.

Subordination.  No indebtedness shall be senior in any respect to this Note without the prior written consent of the Holder.  To the extent bankruptcy proceedings are initiated by the Company or a third party, the Holder shall receive the same percentage of ownership pari-passu as the Holder would have under Section 3 hereof, regardless of any bankruptcy protection afforded to the Company.

7.

Events of Default.  The entire unpaid Outstanding Amount shall become immediately due and payable upon the occurrence of an Event of Default.  An “Event of Default” shall be deemed to have occurred if:

(a)

the Company shall: (i) be unable, or admit in writing its inability, to pay its debts as they mature; (ii) make a general assignment for the benefit of creditors; (iii) be adjudicated a bankrupt or insolvent; (iv) file a voluntary petition in bankruptcy, or a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any insolvency law, or an answer admitting the material allegations of a bankruptcy, reorganization or insolvency petition filed against it; (v) take corporate action for the purpose of effecting any of the foregoing; or (vi) have an order for relief entered against it in any proceeding under the United States Bankruptcy Code; 

(b)

an order, judgment or decree shall be entered, without the application, approval or consent of the Company by any court of competent jurisdiction, approving a petition seeking reorganization of the Company or appointing a receiver, trustee or liquidator of the Company or of all or a substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of thirty (30) consecutive days; or

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(c)

the Company shall fail to pay as and when due any principal or interest hereunder and such nonpayment shall continue uncured for a period of ten (10) business days after written notice by the Holder thereof.

8.

Transfer; Successors and Assigns.  This Note may be transferred only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company.  Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name, of, the transferee.  Interest and principal are payable only to the registered holder of this Note.  The terms and conditions of this Note shall inure to the benefit of and binding upon the respective successors and assigns of the parties.  

9.

Governing Law.  This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law and choice of law that would cause the laws of any other jurisdiction to apply.  

10.

Notices.  Whenever any notice is required to be given by the Company to a Holder, such notice shall be sent in writing via first class mail, postage prepaid, to the Holder at the Holder’s last address appearing on the books maintained by the Company for registration, which notice shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  Whenever any notice is required to be given by the Holder of this Note to the Company, such notice shall be sent in writing via first class mail, postage prepaid, to the Company at the Company’s address above.

11.

Amendments and Waivers.  This Note and any term hereof may be amended, waived, discharged or terminated only by an instrument in writing signed by the party against whom enforcement of such amendment, waiver, discharge or termination is sought.  No waivers of any term, condition or provision of this Note, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

12.

Immunity of Members, Officers, Directors and Employees.  No recourse shall be had for the payment of the principal or interest on this Note or for any claim based thereon or otherwise in any manner in respect thereof, to or against any subsidiary, member, officer, director or employee, as such, past, present or future, of the Company or any respective subsidiary, member, officer, director or employees, as such, past, present or future, of any predecessor or successor company, either directly or through the Company or such predecessor or successor company, whether by virtue of any constitutional provision or statute or rule of law, or by the enforcement of any assessment or penalty, or in any other manner, all such liability being expressly waived and released by the acceptance of this Note and as part of the consideration for the issuance thereof.

[Signature on Following Page]

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed and delivered by its authorized officer, as of the date first above written.

VALIDIAN CORPORATION

/s/ Bruce Benn

By:                                                                 

       Name:  Bruce Benn

       Title:    Chief Executive Officer

/s/ Ronald I Benn

By:__________________________________  

      Name: Ronald I Benn

      Title:   Chief Financial Officer

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