Exhibit 10.3
ANNEX IV
TO
BRIDGE LOAN AGREEMENT
[PROTOTYPE FOR EACH ISSUANCE]
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
RIM SEMICONDUCTOR COMPANY
COMMON STOCK PURCHASE WARRANT
1. ISSUANCE. In consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
RIM SEMICONDUCTOR COMPANY, a Utah corporation (the "Company"),
____________________, or registered assigns (the "Holder") is hereby granted the
right to purchase at any time, on or after the Commencement Date (as defined
below) until 5:00 P.M., New York City time, on _____________, 2011(1) (the
"Expiration Date"), _____________ Thousand _______ (__________)(2) fully paid
and nonassessable shares of the Company's Common Stock, $0.001 par value per
share (the "Common Stock"), at an initial exercise price per share (the
"Exercise Price) of $0.10 per share, subject to further adjustment as set forth
herein. This Warrant is being issued pursuant to the terms of that certain
Bridge Loan Agreement, dated as of January 24, 2006 (the "Agreement"), to which
the Company and Holder (or Holder's predecessor in interest) are parties.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement. This Warrant was originally issued to the Holder of
the Holder's predecessor in interest on _____________, 200_(3) (the "Issue
Date").
2. EXERCISE OF WARRANTS.
2.1 GENERAL.
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(1)Insert date which the later of January 31, 2011 or the last calendar of the
month in which the fifth anniversary of the Closing Date occurs.
(2)Insert amount equal to Lender's Allocable Share of 7,500,000 shares.
(3)Insert the Advance Date or the Closing Date, as the case may be.
(a) This Warrant is exercisable in whole or in part
at any time and from time to time commencing on the Commencement Date (as
defined below). Such exercise shall be effectuated by submitting to the Company
(either by delivery to the Company or by facsimile transmission as provided in
Section 8 hereof) a completed and duly executed Notice of Exercise
(substantially in the form attached to this Warrant Certificate) as provided in
the Notice of Exercise (or revised by notice given by the Company as
contemplated by the Section headed "NOTICES" in the Agreement). The date such
Notice of Exercise is faxed to the Company shall be the "Exercise Date,"
provided that, if such exercise represents the full exercise of the outstanding
balance of the Warrant, the Holder of this Warrant tenders this Warrant
Certificate to the Company within five (5) Trading Days thereafter. The Notice
of Exercise shall be executed by the Holder of this Warrant and shall indicate
(i) the number of shares then being purchased pursuant to such exercise and (ii)
if applicable (as provided below), whether the exercise is a cashless exercise.
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(b) The provisions of this Section 2.1(b) shall only
be applicable on or after the first anniversary of the Issue Date, but shall not
be applicable if, on the Exercise Date, there is an effective registration
statement covering the resale of the Warrant Shares by the Holder. If the Notice
of Exercise form elects a "cashless" exercise, the Holder shall thereby be
entitled to receive a number of shares of Common Stock equal to (w) the excess
of the Current Market Value (as defined below) over the total cash exercise
price of the portion of the Warrant then being exercised, divided by (x) the
Market Price of the Common Stock as of the trading day immediately prior to the
Exercise Date. For the purposes of this Warrant, the terms (y) "Current Market
Value" shall mean an amount equal to the Market Price of the Common Stock as of
the Trading Day immediately prior to the Exercise Date, multiplied by the number
of shares of Common Stock specified in such Notice of Exercise Form, and (z)
"Market Price of the Common Stock" shall mean the Closing Price (as defined
below) of the Common Stock.
(c) If the Notice of Exercise form elects a "cash"
exercise (or if the cashless exercise referred to in the immediately preceding
paragraph (b) is not available in accordance with its terms), the Exercise Price
per share of Common Stock for the shares then being exercised shall be payable,
at the election of the Holder, in cash or by certified or official bank check or
by wire transfer in accordance with instructions provided by the Company at the
request of the Holder.
(d) The Exercise Price per share of Common Stock for
the shares then being exercised shall be payable, at the election of the Holder,
in cash or by certified or official bank check or by wire transfer in accordance
with instructions provided by the Company at the request of the Holder.
(e) Upon the appropriate payment, if any, of the
Exercise Price for the shares of Common Stock purchased, together with the
surrender of this Warrant Certificate (if required), the Holder shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased. The Company shall deliver such certificates representing the
Warrant Shares in accordance with the instructions of the Holder as provided in
the Notice of Exercise (the certificates delivered in such manner, the "Warrant
Share Certificates") within three (3) Trading Days (such third Trading Day, a
"Delivery Date") of (i) with respect to a "cashless exercise," the Exercise Date
or, (ii) with respect to a "cash" exercise, the later of the Exercise Date or
the date the payment of the Exercise Price for the relevant Warrant Shares is
received by the Company.
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(f) The Holder shall be deemed to be the holder of
the shares issuable to it in accordance with the provisions of this Section 2.1
on the Exercise Date.
2.2 LIMITATION ON EXERCISE. Notwithstanding the
provisions of this Warrant, the Agreement or of the other Transaction
Agreements, in no event (except (i) as specifically provided in this Warrant as
an exception to this provision, (ii) during the forty-five (45) day period prior
to the Expiration Date, or (iii) while there is outstanding a tender offer for
any or all of the shares of the Company's Common Stock) shall the Holder be
entitled to exercise this Warrant, or shall the Company have the obligation to
issue shares upon such exercise of all or any portion of this Warrant to the
extent that, after such exercise the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unexercised portion of the Warrants or other rights to purchase Common Stock or
through the ownership of the unconverted portion of convertible securities), and
(2) the number of shares of Common Stock issuable upon the exercise of the
Warrants with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock (after taking into account
the shares to be issued to the Holder upon such exercise). For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such sentence. The Holder, by its acceptance of this Warrant, further agrees
that if the Holder transfers or assigns any of the Warrants to a party who or
which would not be considered such an affiliate, such assignment shall be made
subject to the transferee's or assignee's specific agreement to be bound by the
provisions of this Section 2.2 as if such transferee or assignee were the
original Holder hereof.
2.3 CERTAIN DEFINITIONS. As used herein, each of the
following terms has the meaning set forth below, unless the context otherwise
requires:
(a) "Commencement Date" means the date which is
sixty-five (65) days after the Issue Date.
(b) "Closing Price" means the 4:00 P.M. closing bid
price of the Common Stock on the Principal Trading Market on the relevant
Trading Day(s), as reported by the Reporting Service for the relevant date.
(c) "Reporting Service" means Bloomberg LP or if that
service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by a
Majority in Interest of the Holders and reasonably acceptable to the Company.
(d) "Majority in Interest of the Holders" means, as
of the relevant date, one or more Holders whose respective outstanding principal
amounts of the Notes held by each of them, as of such date, aggregate more than
fifty percent (50%) of the aggregate outstanding principal amounts of the
outstanding Notes held by all Holders on that date.
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3. RESERVATION OF SHARES. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant one hundred percent (100%) of the number of shares
of its Common Stock as shall be required for issuance of the Warrant Shares for
the then unexercised portion of this Warrant. For the purposes of such
calculations, the Company should assume that the outstanding portion of this
Warrant was exercisable in full at any time, without regard to any restrictions
which might limit the Holder's right to exercise any portion of this Warrant
held by the Holder.
4. MUTILATION OR LOSS OF WARRANT. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. PROTECTION AGAINST DILUTION AND OTHER ADJUSTMENTS.
6.1 ADJUSTMENT MECHANISM. If an adjustment of the
Exercise Price is required pursuant to this Section 6 (other than pursuant to
Section 6.4), the Holder shall be entitled to purchase such number of shares of
Common Stock as will cause (i) (x) the total number of shares of Common Stock
Holder is entitled to purchase pursuant to this Warrant following such
adjustment, multiplied by (y) the adjusted Exercise Price per share, to equal
the result of (ii) (x) the dollar amount of the total number of shares of Common
Stock Holder is entitled to purchase before adjustment, multiplied by (y) the
total Exercise Price before adjustment.(4)
6.2 CAPITAL ADJUSTMENTS. In case of any stock split
or reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation (where the Company is not the
surviving entity), the provisions of this Section 6 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Warrant and the original Exercise Price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions of
this Section shall be applied in a fair, equitable and reasonable manner so as
to give effect, as nearly as may be, to the purposes hereof. A rights offering
to stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights. The Company will not effect any consolidation or
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(4)Example: Assume 100,000 shares remain under Warrant at original stated
Exercise Price of US$0.10. Total exercise price (clause (y) in text) is (i)
100,000 x (ii) US$0.10, or US$10,000. Company effects 2:1 stock split. Exercise
Price is adjusted to US$0.05. Number of shares covered by Warrant is adjusted to
200,000, because (applying clause (x) in text) (i) 200,000 x (ii) US$0.05 =
US$10,000.
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merger, unless prior to the consummation thereof, the successor or acquiring
entity (if other than the Company) and, if an entity different from the
successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock of the Company are entitled to receive as a result
of such consolidation or merger assumes by written instrument the obligations
under this Warrant (including under this Section 6) and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.
6.3 ADJUSTMENT FOR SPIN OFF. If, for any reason,
prior to the exercise of this Warrant in full, the Company spins off or
otherwise divests itself of a part of its business or operations or disposes all
or of a part of its assets in a transaction (the "Spin Off") in which the
Company does not receive compensation for such business, operations or assets,
but causes securities of another entity (the "Spin Off Securities") to be issued
to security holders of the Company, then the Company shall cause (i) to be
reserved Spin Off Securities equal to the number thereof which would have been
issued to the Holder had all of the Holder's unexercised Warrants outstanding on
the record date (the "Record Date") for determining the amount and number of
Spin Off Securities to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of business on the
Trading Day immediately before the Record Date (the "Reserved Spin Off Shares"),
and (ii) to be issued to the Holder on the exercise of all or any of the
Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x)
the Reserved Spin Off Shares, multiplied by (y) a fraction, of which (I) the
numerator is the amount of the Outstanding Warrants then being exercised, and
(II) the denominator is the amount of the Outstanding Warrants.
6.4 ADJUSTMENT FOR CERTAIN TRANSACTIONS. Reference is
made to the provisions of Appendix A to this Warrant, the terms of which are
incorporated herein by reference. The Exercise Price shall be adjusted as
provided in the applicable provisions of said Appendix A.
7. TRANSFER TO COMPLY WITH THE SECURITIES ACT. This Warrant
has not been registered under the Securities Act of 1933, as amended, (the
"Act") and has been issued to the Holder for investment and not with a view to
the distribution of either the Warrant or the Warrant Shares. Neither this
Warrant nor any of the Warrant Shares or any other security issued or issuable
upon exercise of this Warrant may be sold, transferred, pledged or hypothecated
in the absence of an effective registration statement under the Act relating to
such security or an opinion of counsel satisfactory to the Company that
registration is not required under the Act. Each certificate for the Warrant,
the Warrant Shares and any other security issued or issuable upon exercise of
this Warrant shall contain a legend on the face thereof, in form and substance
satisfactory to counsel for the Company, setting forth the restrictions on
transfer contained in this Section.
8. BUY-IN AMOUNT.
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(a) If, by the relevant Delivery Date, the Company fails for
any reason to deliver the relevant Warrant Share Certificates, and after such
Delivery Date, the Holder who has exercised this Warrant (an "Exercising
Holder") purchases, in an arm's-length open market transaction or otherwise,
shares of Common Stock (the "Covering Shares") in order to make delivery in
satisfaction of a sale of Common Stock by the Exercising Holder (the "Sold
Shares"), which delivery such Exercising Holder anticipated to make using the
shares to be issued upon such exercise (a "Buy-In"), the Exercising Holder shall
have the right to require the Company to pay to the Exercising Holder, in
addition to and not in lieu of all other amounts contemplated in other
provisions of the Transaction Agreements, the Warrant Share Buy-In Adjustment
Amount (as defined below). The Company shall pay the Warrant Share Buy-In
Adjustment Amount to the Exercising Holder in immediately available funds
immediately upon demand by the Exercising Holder.
(b) The term "Warrant Share Buy-In Adjustment Amount" means
the amount equal to the excess, if any, of (i) the Exercising Holder's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (ii) the net proceeds (after brokerage commissions, if any) received by the
Exercising Holder from the sale of the Sold Shares. By way of illustration and
not in limitation of the foregoing, if the Exercising Holder purchases shares of
Common Stock having a total purchase price (including brokerage commissions) of
$11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Warrant Share Buy-In Adjustment Amount which the
Company will be required to pay to the Exercising Holder will be $1,000.
9. NOTICES. Any notice required or permitted hereunder shall
be given in manner provided in the Section headed "NOTICES" in the Agreement,
the terms of which are incorporated herein by reference.
10. SUPPLEMENTS AND AMENDMENTS; WHOLE AGREEMENT. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant contains the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
11. GOVERNING LAW. This Warrant shall be deemed to be a
contract made under the laws of the State of Delaware for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of
Wilmington or the state courts of the State of Delaware sitting in the City of
Wilmington in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on FORUM NON CONVENIENS, to the bringing of any such proceeding
in such jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
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12. JURY TRIAL WAIVER. The Company and the Holder hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.
13. REMEDIES. The Company stipulates that the remedies at law
of the Holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. COUNTERPARTS. This Warrant may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Balance of page intentionally left blank]
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15. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the th day of _____________________________, 200__.
RIM SEMICONDUCTOR COMPANY
By: _______________________________
___________________________________
(Print Name)
___________________________________
(Title)
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APPENDIX A
TO
COMMON STOCK PURCHASE WARRANT
OF
RIM SEMICONDUCTOR COMPANY
1. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement or in the Warrant.
2. (a) The term "Lower Price Transaction" means a New Transaction offered or
consummated during the New Transaction Period (as defined below), where the
lowest New Transaction Price (as defined below) is, or by its terms or by an
existing understanding of the Company and the New Investor, could subsequently
be adjusted or revised to be, lower than the then effective Exercise Price of
the Warrants (such Exercise Price, in each case, subject to adjustment in the
same manner as the initial Exercise Price of the Warrant is adjusted, other than
as a result of the application of this Appendix A).
(b) "New Transaction Price" means the Basic New Transaction Price (as
defined below) except that if the New Transaction Exercise Price is lower than
the Basic New Transaction Price, it means the New Transaction Exercise Price.
(c) "Basic New Transaction Price" means, as may be applicable, on a per
share basis, the lower of (1) the lowest fixed purchase price of any shares of
the New Common Stock contemplated in the New Transaction, or (2) the lowest
conversion price or put or call price which would be applicable under the terms
of the New Transaction; in each such case, whether such purchase or conversion
price or put or call price is stated or otherwise specified or is determined on
the closing date of the New Transaction by the application of a formula set in
the documents reflecting the New Transaction or could result from adjustments or
revisions contemplated in the relevant agreements for the New Transaction and
whenever such adjustment or revision would be applicable (and if no minimum
purchase price, conversion price or put or call price, as the case may be, is
set, it shall be assumed that such minimum purchase price or conversion price is
$.01); and provided, further, that, if the securities issued in the New
Transaction are issued at a Face Value Discount (as defined below), the New
Transaction Price shall be adjusted to reflect such discount.(5)
(d) "New Transaction Exercise Price" means the lowest exercise price
per share applicable to the warrants, option or similar instrument (howsoever
denominated; collectively, "New Transaction Warrants") included in such New
Transaction, whether such exercise price is stated or could result from
adjustments or revisions contemplated in the relevant agreements for the New
Transaction and whenever such exercise price would be applicable (and, if no
minimum exercise price is set, it shall be assumed that such minimum exercise
price is $.01).
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(5)By way of illustration, if convertible preferred shares having a stated value
of $1 million and a fixed conversion price of $0.50 (resulting in 2,000,000
shares) were sold for a purchase price of $800,000, the effective New
Transaction Price would be $0.40 (the conversion price at which $800,000 would
convert into 2,000,000 shares).
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(e) "Face Value Discount" means consideration less than, as the case
may be, (x) the number of shares being issued multiplied by the stated purchase
price, (y) the stated principal amount of a debenture, note or similar
instrument or (z) the stated value of the shares of convertible stock.
(f) The term "New Transaction Period" means the period commencing on
the Issue Date and continuing until the earlier of (i) the Expiration Date or
(ii) the date on which this Warrant has been fully exercised.
3. The Company covenants and agrees that, if there is a Lower Price Transaction
during the New Transaction Period, then the Exercise Price on the unexercised
portion of this Warrant shall be adjusted to equal the lowest New Transaction
Price applicable to the Lower Price Transaction.
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NOTICE OF EXERCISE OF WARRANT
TO: RIM SEMICONDUCTOR COMPANY. VIA TELECOPIER TO:
000 XX 000xx Xxx., Xxxxx 000 (000) 000-0000
Xxxxxxxx, XX 00000
Attn: President
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate, dated as of ________________, 20___ , to
purchase ___________ shares of the Common Stock, $0.001 par value ("Common
Stock"), of RIM SEMICONDUCTOR COMPANY and tenders herewith payment in accordance
with Section 2 of said Common Stock Purchase Warrant, as follows:
[ ] CASH: $________________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
[ ] enclosed check
[ ] wire transfer
[ ] other
[ ] CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:
Net number of Warrant Shares to be issued to Holder :________*
* based on: CURRENT MARKET VALUE - (EXERCISE PRICE X EXERCISE SHARES)
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Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = $_______________
Current Market Value [MP x Exercise Shares] = $_______________
It is the intention of the Holder to comply with the provisions of
Section 2.2 of the Warrant regarding certain limits on the Holder's right to
exercise thereunder. Based on the analysis on the attached Worksheet Schedule,
the Holder believes this exercise complies with the provisions of said Section
2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby,
the Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
As contemplated by the Warrant, this Notice of Exercise is being sent
by facsimile to the telecopier number and officer indicated above.
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If this Notice of Exercise represents the full exercise of the
outstanding balance of the Warrant, the Holder either (1) has previously
surrendered the Warrant to the Company or (2) will surrender (or cause to be
surrendered) the Warrant to the Company at the address indicated above by
express courier within five (5) Trading Days after delivery or facsimile
transmission of this Notice of Exercise.
The certificates representing the Warrant Shares should be transmitted
by the Company to the Holder
[ ] via express courier, or
[ ] by electronic transfer
after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:
_____________________________________
_____________________________________
_____________________________________
Dated: ______________________
____________________________
[Name of Holder]
By: _________________________
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NOTICE OF EXERCISE OF WARRANT
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates _____________
2. Shares to be issued on current exercise _____________
3. Other shares to be issued on other current exercise(s) and
other current conversion(s)(6) _____________
4. Other shares eligible to be acquired within next 60 days
without restriction _____________
5. Total [sum of Lines 1 through 4] _____________
6. Outstanding shares of Common Stock(7) _____________
7. Adjustments to Outstanding
a. Shares known to Holder as previously issued
to Holder or others but not included in Line 6 _____________
b. Shares to be issued per Line(s) 2 and 3 _____________
c. Total Adjustments [Lines 7a and 7b] _____________
8. Total Adjusted Outstanding [Lines 6 plus 7c] _____________
9. Holder's Percentage [Line 5 divided by Line 8] ____________%
[Note: Line 9 not to be above 4.99%]
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(6)Includes shares issuable on conversion of convertible securities (including
assumed payment, if relevant, of interest or dividends) or exercise of other
rights, including other warrants or options (7)Based on latest SEC filing by
Company or information provided by executive officer of Company, counsel to
Company or transfer agent
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