FORM OF WARRANT
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 _____________, 20121 (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 March 26, 2007 (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 _____________, 20073 (the “Issue Date”).
__________________
1
Insert date which the later of March 31, 2012 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 3,333,333
shares.
3
Insert the Closing Date.
1
2. Exercise
of Warrants.
2.1 General.
(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.
(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.
(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
2.2 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. Nothing herein shall preclude
the Holder from disposing of a sufficient number of other shares of Common
Stock
beneficially owned by the Holder so as to thereafter permit the continued
exercise of this Warrant.
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 of Series 07-01
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 of such Series held by all Holders
on
that date.
3
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
__________________
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.
4
stock dividend
to the extent of the bargain purchase element of the rights. The Company will
not effect any consolidation or 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. 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.
9. 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.
5
10. 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.
11. 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.
12. 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.
13. 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]
6
14. 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) | |
7
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).
_________________________
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).
Appendix
A
- Page 1
(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.
Appendix
A
- Page 2
NOTICE
OF
EXERCISE OF WARRANT
| TO: RIM SEMICONDUCTOR COMPANY. |
VIA
TELECOPIER TO:
|
|
000
XX 000xx Xxx., Xxxxx 000
|
(503)
257-6622
|
|
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, $0.001 par value (“Common Stock”), of
RIM SEMICONDUCTOR COMPANY and tenders herewith payment in accordance with
Section 2 of said Common Stock Purchase Warrant, as follows:
r CASH:$___________________________
= (Exercise Price x Exercise Shares)
Payment
is being made by:
r
enclosed check
r
wire
transfer
r
other
______________________
r 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)
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.
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.
1
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
r
via
express
courier, or
r
by
electronic transfer
after
receipt of this Notice of Exercise (by facsimile transmission or otherwise)
to:
________________________________________________________
________________________________________________________
________________________________________________________
Dated:
_______________________
____________________________
[Name
of
Holder]
By:
_________________________
2
