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EXHIBIT 4.1
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
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Principal Amount $____________ |
Issue Date: December 5, 2007
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Purchase Price $___________ |
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SECURED CONVERTIBLE NOTE
FOR VALUE RECEIVED, RIM
SEMICONDUCTOR COMPANY, a Utah corporation (hereinafter called
“Borrower”), hereby promises to pay to
_____________________________________,
___________________________________________________________________________________________
(the “Holder”) or order, without demand, the sum
of __________________________________________ Dollars
($_________), with interest accruing thereon, on December 5,
2009 (the “Maturity Date”), if not retired
sooner.
This
Note has been entered into pursuant to the terms of a
subscription agreement between the Borrower and the Holder,
dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such
Subscription Agreement. Unless otherwise separately
defined herein, all capitalized terms used in this Note shall
have the same meaning as is set forth in the Subscription
Agreement. The following terms shall apply to this
Note:
ARTICLE I
GENERAL PROVISIONS
1.1
Interest Rate . Interest payable on this
Note shall accrue at the annual rate of ten percent (10%) and
be payable December 31, 2007 and quarterly thereafter, and on
the Maturity Date, accelerated or otherwise, when the
principal and remaining accrued but unpaid interest shall be
due and payable, or sooner as described below, unless
previously converted into Common Stock in accordance with
Article II hereof.
1.2
Payment Grace
Period . The Borrower shall
have a five (5) day grace period to pay any monetary amounts due
under this Note, after which grace period a default interest rate
of fifteen percent (15%) per annum shall apply until such amounts
are paid .
1.3
Conversion Privileges . The Conversion
Privileges set forth in Article II shall remain in full force
and effect immediately from the date hereof and until the Note
is paid in full regardless of the occurrence of an Event of
Default. The Note shall be payable in full on the
Maturity Date, unless previously converted into Common Stock
in accordance with Article II hereof; provided, that if an
Event of Default has occurred, the Holder may elect to extend
the Maturity Date for a time period up to the duration of the
pendency of the Event of Default.
ARTICLE II
CONVERSION RIGHTS
The
Holder shall have the right to convert the principal and any
interest due under this Note into Shares of the
Borrower’s Common Stock, $.001 par value per share
(“Common Stock”) as set forth below.
2.1.
Conversion into the Borrower’s Common Stock
.
(a) The
Holder shall have the right from and after the date of the
issuance of this Note and then at any time until this Note is
fully paid, to convert any outstanding and unpaid principal
portion of this Note, and accrued interest, at the election of
the Holder (the date of giving of such notice of conversion
being a “Conversion Date”) into fully paid and
nonassessable shares of Common Stock as such stock exists on
the date of issuance of this Note, or any shares of capital
stock of Borrower into which such Common Stock shall hereafter
be changed or reclassified, at the conversion price as defined
in Section 2.1(b) hereof (the “Conversion Price”),
determined as provided herein. Upon delivery to the
Borrower of a completed Notice of Conversion, a form of which
is annexed hereto, Borrower shall issue and deliver to the
Holder within three (3) business days after the Conversion
Date (such third day being the “Delivery Date”)
that number of shares of Common Stock for the portion of the
Note converted in accordance with the foregoing. At
the election of the Holder, the Borrower will deliver accrued
but unpaid interest on the Note, if any, through the
Conversion Date directly to the Holder on or before thirty
(30) days after the Delivery Date (as defined in the
Subscription Agreement). The number of shares of
Common Stock to be issued upon each conversion of this Note
shall be determined by dividing that portion of the principal
of the Note and interest, if any, to be converted, by the
Conversion Price.
(b) Subject
to adjustment as provided in Section 2.1(c) hereof, the
Conversion Price per share shall be equal to seventy-five
percent (75%) of the average of the closing bid prices of the
Common Stock as reported by Bloomberg L.P. for the Principal
Market for the ten (10) trading days preceding but not
including the Conversion Date, but in no event will the
Conversion Price be greater than $0.05, subject to adjustment
as described herein.
(c) The
Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to
Section 2.1(a), shall be subject to adjustment from time to
time upon the happening of certain events while this
conversion right remains outstanding, as follows:
A.
Merger, Sale of Assets, etc. If
the Borrower at any time shall consolidate with or merge into
or sell or convey all or substantially all its assets to any
other corporation, this Note, as to the unpaid principal
portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase such number and
kind of shares or other securities and property as would have
been issuable or distributable on account of such
consolidation, merger, sale or conveyance, upon or with
respect to the securities subject to the conversion or
purchase right immediately prior to such consolidation,
merger, sale or conveyance. The foregoing provision
shall similarly apply to successive transactions of a similar
nature by any such successor or purchaser. Without
limiting the generality of the foregoing, the anti-dilution
provisions of this Section shall apply to such securities of
such successor or purchaser after any such consolidation,
merger, sale or conveyance.
B.
Reclassification, etc. If the
Borrower at any time shall, by reclassification or otherwise,
change the Common Stock into the same or a different number of
securities of any class or classes that may be issued or
outstanding, this Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of
such securities and kind of securities as would have been
issuable as the result of such change with respect to the
Common Stock immediately prior to such reclassification or
other change.
C.
Stock Splits, Combinations and Dividends
. If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Conversion Price shall be proportionately
reduced in case of subdivision of shares or stock dividend or
proportionately increased in the case of combination of
shares, in each such case by the ratio which the total number
of shares of Common Stock outstanding immediately after such
event bears to the total number of shares of Common Stock
outstanding immediately prior to such event..
D.
Share Issuance . So long as this
Note is outstanding, if the Borrower shall issue or agree to
issue any shares of Common Stock except for the Excepted
Issuances (as defined in the Subscription Agreement) for a
consideration less than the Conversion Price in effect at the
time of such issue, then, and thereafter successively upon
each such issue, the maximum Conversion Price shall be reduced
to such other lower issue price. For purposes of
this adjustment, the issuance of any security carrying the
right to convert such security into shares of Common Stock or
of any warrant, right or option to purchase Common Stock shall
result in an adjustment to the Conversion Price upon the
issuance of the above-described security and again upon the
issuance of shares of Common Stock upon exercise of such
conversion or purchase rights if such issuance is at a price
lower than the then applicable Conversion
Price. The reduction of the Conversion Price
described in this paragraph is in addition to other rights of
the Holder described in this Note and the Subscription
Agreement.
(d) Whenever
the Conversion Price is adjusted pursuant to Section 2.1(c)
above, the Borrower shall promptly mail to the Holder a notice
setting forth the Conversion Price after such adjustment and
setting forth a statement of the facts requiring such
adjustment.
(e) During
the period the conversion right exists, Borrower will reserve
from its authorized and unissued Common Stock not less than an
amount of Common Stock equal to one hundred twenty-five
percent (125%) of the amount of shares of Common Stock
issuable upon the full conversion of this
Note. Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and
non-assessable. Borrower agrees that its issuance
of this Note shall constitute full authority to its officers,
agents, and transfer agents who are charged with the duty of
executing and issuing stock certificates to execute and issue
the necessary certificates for shares of Common Stock upon the
conversion of this Note.
2.2
Method of Conversion . This Note may be
converted by the Holder in whole or in part as described in
Section 2.1(a) hereof and the Subscription
Agreement. Upon partial conversion of this Note, a
new Note containing the same date and provisions of this Note
shall, at the request of the Holder, be issued by the Borrower
to the Holder for the principal balance of this Note and
interest which shall not have been converted or
paid.
2.3
No Effective Registration
. Notwithstanding anything to the contrary
herein, no amount payable hereunder may be paid in shares of
Common Stock by the Borrower without the Holder’s
consent unless (a) either (i) an effective current
Registration Statement covering the shares of Common Stock to
be issued in satisfaction of such obligations exists, or (ii)
an exemption from registration of the Common Stock is
available pursuant to Rule 144(k) of the 1933 Act, and (b) no
Event of Default hereunder (or an event that with the passage
of time or the giving of notice could become an Event of
Default), exists and is continuing, unless such event or Event
of Default is cured within any applicable cure period or is
otherwise waived in writing by the Holder in whole or in part
at the Holder's option.
2.4
Optional Redemption of Principal Amount
. Provided an Event of Default or an event
which with the passage of time or the giving of notice could
become an Event of Default has not occurred, whether or not
such Event of Default has been cured, the Borrower will have
the option of prepaying the outstanding Principal amount
of
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