Convertible Promissory Note


    Exhibit
      10.5

    
 

    THIS
      NOTE AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE
      TRANSFERRED OR DISPOSED OF UNLESS AND UNTIL THIS NOTE AND/OR SUCH SECURITIES
      ARE
      REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR
      AN
      EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

    


    CONVERTIBLE
      PROMISSORY NOTE

    

      
        	
                $400,000.00

              	
                May
                  24, 2007

              
	 	
                Portland,
                  Oregon

              


      

    

     

    For
      value
      received, RIM SEMICONDUCTOR COMPANY, a Utah corporation (“Maker”),
      hereby unconditionally promises to pay to the order of The Charles R. Cono
      Trust
      (“Payee”)
      the
      principal sum of FOUR HUNDRED THOUSAND
      AND
      00/100 DOLLARS ($400,000.00), together with interest on the unpaid principal
      balance from time to time outstanding at a rate per annum equal to 10.0%
      (calculated on the basis of actual days elapsed, but computed as if each
      calendar year consisted of 360 days); provided that, in no event shall the
      interest rate hereunder exceed the Highest Lawful Rate (as defined in Paragraph
      4).

    


    Interest
      on this Convertible Promissory Note (“Note”)
      shall
      accrue from the date hereof. All principal of and interest on this Note shall
      be
      due and payable on August 22, 2007 (the “Maturity
      Date”).
      

     

    All
      payments on this Note shall be due and payable in lawful money of the United
      States of America at 5550 Baltimore Drive, La Mesa, California 91942-1776 (or
      such other place as Payee may from time to time designate).

    


    1. Events
      of Default and Remedies.
      In the
      event Maker fails to pay the amount due under this Note within ten Business
      Days
      (as hereafter defined) after the due date (a “Default”),
      the
      holder of this Note may (i) offset against this Note any sum or sums owed by
      the
      holder hereof to Maker, (ii) exercise its Optional Conversion rights under
      Paragraph 3, or (iii) proceed to protect and enforce its rights either by suit
      in equity and/or by action at law, or by other appropriate proceedings, whether
      for the specific performance of any covenant or agreement contained in this
      Note
      or to enforce any other legal or equitable right of the holder of this Note.
      As
      used herein, a “Business
      Day”
is
      any
      day other than a Saturday, Sunday or a legal holiday for financial institutions
      in Portland, Oregon.

    


    2. Prepayment.
      The
      unpaid principal balance of and accrued but unpaid interest on this Note may
      be
      prepaid in whole or in part at any time without premium or penalty, but only
      if
      all accrued interest on the amount of each principal prepayment is paid to
      the
      date of such principal prepayment.

    


    3. Optional
      Conversion Upon Default.

    


    (a) Conversion
      Option.
      If the
      Note is in Default, this Note shall be convertible at the option of Payee or
      other holder hereof (the “Optional
      Conversion”),
      in
      whole or in part, in lieu of and in satisfaction of the unpaid principal and
      unpaid interest hereunder, into that number of fully paid and nonassessable
      shares of Common Stock (as defined in Paragraph 4) as is equal to the quotient
      of the unpaid principal plus the unpaid interest divided by the applicable
      Conversion Price (as defined in Paragraph 4). Upon any Optional Conversion,
      the
      outstanding principal and unpaid interest due under this Note shall be reduced
      in full by an amount equal to the number of shares of Common Stock issued upon
      such conversion multiplied by the applicable Conversion Price.

     

    
      
        
        

      

      
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    (b) Conversion
      Procedures.
      If
      Payee is entitled to and desires to convert this Note into Common Stock, it
      shall surrender this Note to Maker at its principal executive offices,
      accompanied by proper instruments of transfer to Maker or in blank, accompanied
      by irrevocable written notice to Maker that Payee elects so to convert this
      Note
      and the name or names (with address) in which a certificate or certificates
      for
      Common Stock are to be issued. Maker shall, as soon as practicable after such
      written notice and compliance with any other conditions herein contained,
      deliver at such office to Payee, certificates for the number of full shares
      of
      Common Stock to which it shall be entitled. Such conversion shall be deemed
      to
      have been made as of the date of such surrender of this Note, and the person
      or
      persons entitled to receive Common Stock or other securities deliverable upon
      conversion shall be treated for all purposes as the record holder or holders
      thereof on such date.

    


    (c) Certain
      Adjustments.
      The
      applicable Conversion Price and the number of securities issuable upon
      conversion of this Note shall be subject to adjustment from time to time as
      follows:

    


    (i) In
      case
      Maker shall at any time after the date hereof (1) pay a dividend or make a
      distribution on its capital stock that is paid or made in shares of stock of
      Maker, (2) subdivide its outstanding shares of Common Stock into a greater
      number of shares or (3) combine its outstanding shares of Common Stock into
      a smaller number of shares, then in each such case the applicable Conversion
      Price in effect immediately prior thereto and the securities issuable shall
      be
      adjusted retroactively as provided below so that Payee thereafter shall be
      entitled to receive the number of shares of Common Stock of Maker and other
      shares and rights to purchase stock or other securities which Payee would have
      owned or have been entitled to receive after the happening of any of the events
      described above had this Note been converted immediately prior to the happening
      of such event or any record date with respect thereto. In the event of the
      redemption of any shares referred to in clause (1), Payee shall have the right
      to receive, in lieu of any such shares or rights, any cash, property or
      securities paid in respect of such redemption. An adjustment made pursuant
      to
      this subparagraph (i) shall become effective immediately after the record
      date in the case of a dividend or distribution and shall become effective
      immediately after the effective date in the case of a subdivision or
      combination.

    


    (ii) Whenever
      the Conversion Price is adjusted as provided above, Maker shall compute the
      adjusted Conversion Price in accordance herewith and mail to Payee a notice
      stating that the Conversion Price has been adjusted and setting forth the
      adjusted Conversion Price.

    


    (iii) In
      the
      event that at any time, as a result of any adjustment made pursuant to this
      Paragraph, Payee shall become entitled to receive any shares of Maker other
      than
      shares of Common Stock or to receive any other securities, the number of such
      other shares or securities so receivable upon conversion of this Note shall
      be
      subject to adjustment from time to time in a manner and on terms as nearly
      equivalent as practicable to the provisions contained in these provisions with
      respect to Common Stock.

     

    
      
        
        

      

      
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    (d) No
      Fractional Shares.
      No
      fractional shares or scrip representing fractional shares of Common Stock shall
      be issued upon conversion of this Note. All calculations of the number of shares
      of Common Stock to be issued upon conversion of this Note shall be rounded
      to
      the nearest whole share.

    


    (e) Reclassification,
      Consolidation, Merger or Sale of Assets.
      In case
      of any reclassification of Common Stock, any consolidation of Maker with, or
      merger of Maker into, any other person, any merger of another person into Maker
      (other than a merger which does not result in any reclassification, conversion,
      exchange or cancellation of outstanding shares of Common Stock of Maker), any
      sale or transfer of all or substantially all of the assets of Maker or any
      compulsory share exchange pursuant to which share exchange the Common Stock
      is
      converted into other securities, cash or other property, then lawful provision
      shall be made as part of the terms of such transaction whereby Payee shall
      have
      the right thereafter, during the period this Note shall be convertible
      hereunder, to convert this Note only into the kind and amount of securities,
      cash and other property receivable upon such reclassification, consolidation,
      merger, sale, transfer or share exchange by a holder of the number of shares
      of
      Common Stock of Maker into which this Note might have been converted immediately
      prior to such reclassification, consolidation, merger, sale, transfer or share
      exchange assuming such holder of Common Stock of Maker (i) is not a person
      with
      which Maker consolidated or into which Maker merged or which merged into Maker,
      to which such sale or transfer was made or a party to such share exchange,
      as
      the case may be (“constituent
      person”),
      or an
      affiliate of a constituent person and (ii) failed to exercise his rights of
      election, if any, as to the kind or amount of securities, cash and other
      property receivable upon such reclassification, consolidation, merger, sale,
      transfer or share exchange (provided that if the kind or amount of securities,
      cash and other property receivable upon such reclassification, consolidation,
      merger, sale, transfer or share exchange is not the same for each share of
      Common Stock of Maker held immediately prior to such consolidation, merger,
      sale
      or transfer by other than a constituent person or an affiliate thereof and
      in
      respect of which such rights of election shall not have been exercised
      (“non-electing
      share”),
      then
      the kind and amount of securities, cash and other property receivable upon
      such
      reclassification, consolidation, merger, sale, transfer or share exchange by
      each non-electing share shall be deemed to be the kind and amount so receivable
      per share by a plurality of the non-electing shares). Maker, the person formed
      by such consolidation or resulting from such merger or which acquires such
      assets or which acquires Maker’s shares, as the case may be, shall make
      provisions in its certificate or articles of incorporation or other constituent
      document to establish such right. Such certificate or articles of incorporation
      or other constituent document shall provide for adjustments which, for events
      subsequent to the effective date of such certificate or articles of
      incorporation or other constituent document, shall be as nearly equivalent
      as
      may be practicable to the adjustments provided for herein. The above provisions
      shall similarly apply to successive reclassifica-tions, consolidations, mergers,
      sales, transfers or share exchanges.

     

    
      
        
        

      

      
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    (f) Reservation
      of Shares; Transfer Taxes; Etc.
      Maker
      shall at all times reserve and keep available, out of its authorized and
      unissued stock, solely for the purpose of effecting the conversion of this
      Note,
      such number of shares of its Common Stock and other securities free of
      preemptive rights as shall from time to time be sufficient to effect the
      conversion of this Note. Maker shall from time to time, in accordance with
      the
      laws of the State of Utah, increase the authorized number of shares of Common
      Stock if at any time the number of shares of Common Stock not outstanding shall
      not be sufficient to permit the conversion of this Note. If the Common Stock
      is
      listed on the New York Stock Exchange, the Nasdaq National Market, or any other
      national securities exchange, Maker will, if permitted by the rules of such
      exchange, list and keep listed on such exchange, upon official notice of
      issuance, all shares of Common Stock issuable upon conversion of this Note.
      Maker shall pay any and all issue or other taxes that may be payable in respect
      of any issue or delivery of shares of Common Stock or other securities upon
      conversion of this Note by Payee.

    


    4. Defined
      Terms.
      As used
      in this Note, the following terms have the respective meanings set forth
      below:

    


    (a) “Common
      Stock”
shall
      mean the common stock of Maker and any capital stock into which such common
      stock shall have been changed and any other stock resulting from any
      reclassification of such stock which is not preferred as to dividends or assets
      over any other class of stock which shall be in effect from time to
      time.

    


    (b) “Conversion
      Price”
shall
      mean, subject to adjustment as provided in Paragraph 3(c) hereof,
      $0.08.

    


    (c)
       “Highest
      Lawful Rate”
means,
      at any given time during which indebtedness shall be outstanding hereunder,
      the
      maximum nonusurious interest rate, if any, that at any time or from time to
      time
      may be contracted for, taken, reserved, charged, or received on the indebtedness
      evidenced by this Note under the laws of the United States and the State of
      Oregon applicable thereto which are presently in effect or, to the extent
      allowed by law, under such applicable laws of the United States and the State
      of
      Oregon which may hereafter be in effect and which allow a higher maximum
      nonusurious interest rate than applicable laws now allow, in any case after
      taking into account, to the extent required by applicable law, any and all
      relevant payments or charges under this Note and any documents executed in
      connection herewith.

    


    5. No
      Impairment.
      Maker
      will not, by amendment of its certificate or articles of incorporation or
      through any reorganization, transfer of assets, merger, dissolution, issuance
      or
      sale of securities or any other voluntary action or inaction, intentionally
      avoid or seek to avoid the observance or performance of any of the material
      terms to be observed or performed hereunder by Maker but will at all times
      in
      good faith assist in the carrying out of all the provisions of this
      Note.

    


    6. Cumulative
      Rights.
      No
      delay on the part of the holder of this Note in the exercise of any power or
      right under this Note, or under any document or instrument executed in
      connection herewith, shall operate as a waiver thereof, nor shall a single
      or
      partial exercise of any other power or right.

     

    
      
        
        

      

      
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    7. Waiver.
      Maker,
      and each surety, endorser, guarantor, and other party ever liable for the
      payment of any sum of money payable on this Note, jointly and severally waive
      demand, presentment, protest, notice of nonpayment, notice of intention to
      accelerate, notice of acceleration, notice of protest, and any and all lack
      of
      diligence or delay in collection or the filing of suit hereon which may occur;
      agree that their liability on this Note shall not be affected by any renewal
      or
      extension in the time of payment hereof, by any indulgences, or by any release
      or change in any security for the payment of this Note; and hereby consent
      to
      any and all renewals, extensions, indulgences, releases, or changes hereof
      or
      hereto, regardless of the number of such renewals, extensions, indulgences,
      releases, or changes.

    


    8. Attorneys’
      Fees and Costs.
      Maker
      promises to pay, upon Payee’s demand therefor, all costs and expenses, including
      reasonable attorneys’ fees (defined as being actual hours worked at the standard
      billing rates of the attorneys involved in any matter), incurred in the
      collection and enforcement of this Note.

     

    9. NO
      ORAL AGREEMENTS.
      THIS
      NOTE (ALONG WITH THE OTHER DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED
      PURSUANT THERETO) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
      NOT
      BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
      AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
      PARTIES.

    


    10. Governing
      Law.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of Oregon.

    


    11. Severability.
      If any
      provision of this Note shall be held to be unenforceable by a court of competent
      jurisdiction, such provisions shall be severed from this Note and the remainder
      of this Note shall continue in full force and effect.

    


    12. Assignment.
      This
      Note, or any portion hereof, may be assigned by Payee without the consent of
      Maker. Any such assignment by Payee shall be in compliance with the Securities
      Act and applicable state securities laws.

    


    


    [Signature
      Page Follows]


    
      
         

        
        

      

      
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    IN
      WITNESS WHEREOF, the undersigned has executed this Note as of the day and year
      first above written.

    


    
      	 	 	 
	
               

            	
              MAKER:

            	 
	 	 	 
	
               

            	
              RIM
                SEMICONDUCTOR COMPANY

            	 
	 	 	 
	 	 	 
	
               

            	
              By:
                /s/
                Brad Ketch            

            	 
	
               

            	
              Brad
                Ketch

            	 
	
               

            	
              Chief
                Executive Officer

            	 
	 	 	 
	
               

            	
              Address:
                305 N.E. 102nd Avenue, Suite 105

            	 
	
               

            	
              Portland,
                Oregon 97220

            	 
	
               

            	
              Phone:
                (503) 257-6700

            	 
	
               

            	
              Fax:
                (503) 257-6622

            	 
	 	 	 
	 	 	 
	
               

            	
              ACKNOWLEDGED:

            	 
	 	 	 
	
               

            	
              PAYEE:

            	 
	 	 	 
	
               

            	
              THE
                CHARLES R. CONO TRUST

            	 
	 	 	 
	
               

            	
              By:
                ___________________________

            	 
	 	
              Charles
                R. Cono, Trustee

            	 
	 	 	 


    

     

     

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