rim_8k-ex0401.htm


    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.

     

    
 

    
      	Principal
              Amount $____________ 	
               Issue
                Date: December 5, 2007

            
	Purchase
              Price $___________	 


    

     

    


    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.


    
      
        
        

      

      
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    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.


    
      
        
        

      

      
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    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.


    
      
        
        

      

      
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    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 this Note (“Optional Redemption”), in whole or
      in part, by paying to the Holder a sum of money equal to one hundred thirty
      percent (130%) of the Principal amount to be redeemed, together with accrued
      but
      unpaid interest thereon and any and all other sums due, accrued or payable
      to
      the Holder arising under this Note or any Transaction Document through the
      Redemption Payment Date as defined below (the “Redemption
      Amount”).  Borrower’s election to exercise its right to prepay must be
      by notice in writing (“Notice of Redemption”).  The Notice of
      Redemption shall specify the date for such Optional Redemption (the “Redemption
      Payment Date”), which date shall be at least thirty (30) business days after the
      date of the Notice of Redemption (the “Redemption Period”).  A Notice
      of Redemption shall not be effective with respect to any portion of the
      Principal Amount for which the Holder has previously delivered an election
      to
      convert, or subject to the previous sentence, for conversions initiated or
      made
      by the Holder during the Redemption Period.  On the Redemption Payment
      Date, the Redemption Amount, less any portion of the Redemption Amount against
      which the Holder has permissibly exercised its conversion rights, shall be
      paid
      in good funds to the Holder. In the event the Borrower fails to pay the
      Redemption Amount on the Redemption Payment Date as set forth herein, then
      (i)
      such Notice of Redemption will be null and void, (ii) Borrower will have no
      right to deliver another Notice of Redemption, and (iii) Borrower’s failure may
      be deemed by Holder to be a non-curable Event of Default.  A
      Redemption Notice may be given only at a time a Registration Statement is
      effective.  A Notice of Redemption may not be given nor may the
      Borrower effectuate a Redemption without the consent of the Holder, if at any
      time during the Redemption Period an Event of Default, or an event which with
      the passage of time or giving of notice could become an Event of Default
      (whether or not such Event of Default has been cured), has occurred or the
      Registration Statement registering the Registrable Securities is not effective
      each day during the Redemption Period.  During the Optional Redemption
      Period, the Company must abide by all of its obligations to the Note
      Holder.

    


    2.5           Maximum
      Conversion.  The Holder shall not be entitled to convert on a
      Conversion Date that amount of the Note in connection with that number of shares
      of Common Stock which would be in excess of the sum of (i) the number of shares
      of Common Stock beneficially owned by the Holder and its affiliates on a
      Conversion Date, (ii) any Common Stock issuable in connection with the
      unconverted portion of the Note, and (iii) the number of shares of Common Stock
      issuable upon the conversion of the Note with respect to which the determination
      of this provision is being made on a Conversion Date, which would result in
      beneficial ownership by the Holder and its affiliates of more than 4.99% of
      the
      outstanding shares of Common Stock of the Borrower on such Conversion
      Date.  For the purposes of the provision 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, and Regulation 13d-3
      thereunder.  Subject to the foregoing, the Holder shall not be limited
      to aggregate conversions of only 4.99% and aggregate conversion by the Holder
      may exceed 4.99%.  The Holder shall have the authority and obligation
      to determine whether the restriction contained in this Section 2.4 will limit
      any conversion hereunder and to the extent that the Holder determines that
      the
      limitation contained in this Section applies, the determination of which portion
      of the Notes are convertible shall be the responsibility and obligation of
      the
      Holder.  The Holder may waive the conversion limitation described in
      this Section 2.4, in whole or in part, upon and effective after 61 days prior
      written notice to the Borrower to increase such percentage to up to
      9.99%.  The Borrower shall not be deemed to be in default of any of
      its obligations by reason of compliance with the foregoing
      restriction.


    
      
        
        

      

      
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    ARTICLE
      III

    


    EVENT
      OF DEFAULT

    


    The
      occurrence of any of the following events of default (“Event of Default”) shall,
      at the option of the Holder hereof, make all sums of principal and interest
      then
      remaining unpaid hereon and all other amounts payable hereunder immediately
      due
      and payable, upon demand, without presentment, or grace period, all of which
      hereby are expressly waived, except as set forth below:

    


    3.1           Failure
      to Pay Principal or Interest.  The Borrower fails to pay any
      installment of principal, interest or other sum due under this Note when due
      and
      such failure continues for a period of five (5) business days after the due
      date.  The five (5) business day period described in this Section 3.1
      is the same five (5) day period described in Section 1.2 hereof.

    


    3.2           Breach
      of Covenant.  The Borrower breaches any material covenant or other
      material term or condition of the Subscription Agreement or this Note in any
      material respect and such breach, if subject to cure, continues for a period
      of
      ten (10) business days after written notice to the Borrower from the
      Holder.

    


    3.3           Breach
      of Representations and Warranties.  Any material representation or
      warranty of the Borrower made herein, in the Subscription Agreement, Transaction
      Documents, or in any agreement, statement or certificate given in writing
      pursuant hereto or in connection therewith shall be false or misleading in
      any
      material respect as of the date made and if made prior to the Closing Date,
      then
      as of the Closing Date.

    


    3.4           Receiver
      or Trustee.  The Borrower shall make an assignment for the benefit
      of creditors, or apply for or consent to the appointment of a receiver or
      trustee for it or for a substantial part of its property or business; or such
      a
      receiver or trustee shall otherwise be appointed.

    


    3.5           Judgments.  Any
      money judgment, writ or similar final process shall be entered or filed against
      Borrower or any of its property or other assets for more than $100,000, and
      shall remain unvacated, unbonded or unstayed for a period of forty-five (45)
      days.

    


    3.6           Bankruptcy.  Bankruptcy,
      insolvency, reorganization or liquidation proceedings or other proceedings
      or
      relief under any bankruptcy law or any law, or the issuance of any notice in
      relation to such event, for the relief of debtors shall be instituted by or
      against the Borrower and if instituted against Borrower are not dismissed within
      forty-five (45) days of initiation.

    


    3.7           Delisting.  Delisting
      of the Common Stock from any Principal Market; failure to comply with the
      requirements for continued listing on a Principal Market for a period of not
      less than three (3) consecutive trading days; or notification from a Principal
      Market that the Borrower is not in compliance with the conditions for such
      continued listing on such Principal Market.

    


    3.8           Non-Payment.  A
      default by the Borrower under any one or more obligations in an aggregate
      monetary amount in excess of $100,000 for more than twenty (20) days after
      the
      due date, unless the Borrower is contesting the validity of such obligation
      in
      good faith.

    


    3.9           Stop
      Trade.  An SEC or judicial stop trade order or Principal Market
      trading suspension that lasts for five (5) or more consecutive trading
      days.


    
      
        
        

      

      
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    3.10           Failure
      to Deliver Common Stock or Replacement Note.  Borrower’s failure
      to timely deliver Common Stock to the Holder pursuant to and in the form
      required by this Note and Sections 7 and 11 of the Subscription Agreement,
      or,
      if required, a replacement Note.

    


    3.11           Non-Registration
      Event.  The occurrence of a Non-Registration Event as described in
      Section 11.4 of the Subscription Agreement that continues for at least fifteen
      (15) consecutive days.

    


    3.12           Reservation
      Default.  Failure by the Borrower to have reserved for issuance
      upon conversion of the Note the amount of Common stock as set forth in this
      Note
      and the Subscription Agreement.

    


    3.13           Restated
      Financial Statements By The Borrower.  A material negative
      restatement of any financial statements included in any of the Reports filed
      prior to the Maturity Date, except as the same may result from a change after
      the Issue Date of this Note, in generally accepted accounting principles or
      other recognized accounting standards or the reasonable interpretation
      thereof.

    


    3.14           Cross
      Default.  A default by the Borrower of a material term, covenant,
      warranty or undertaking of any other agreement to which the Borrower and Holder
      are parties, or the occurrence of a material event of default under any such
      other agreement which is not cured after any required notice and/or cure
      period.

    


    ARTICLE
      IV

    


    SECURITY
      INTEREST

    


    4.1           Security
      Interest/Waiver of Automatic Stay.  This Note is secured by a
      security interest granted to the Collateral Agent for the benefit of the Holder
      pursuant to a Security Agreement, as delivered by Borrower to
      Holder.  The Borrower acknowledges and agrees that should a proceeding
      under any bankruptcy or insolvency law be commenced by or against the Borrower,
      or if any of the Collateral (as defined in the Security Agreement) should become
      the subject of any bankruptcy or insolvency proceeding, then the Holder should
      be entitled to, among other relief to which the Holder may be entitled under
      the
      Transaction Documents and any other agreement to which the Borrower and Holder
      are parties (collectively, “Loan Documents”) and/or applicable law, an order
      from the court granting immediate relief from the automatic stay pursuant to
      11
      U.S.C. Section 362 to permit the Holder to exercise all of its rights and
      remedies pursuant to the Loan Documents and/or applicable law. THE BORROWER
      EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION
      362.  FURTHERMORE, THE BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT
      NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE
      OR
      OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105)
      SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY
      OF
      THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS
      AND/OR APPLICABLE LAW.  The Borrower hereby consents to any motion for
      relief from stay that may be filed by the Holder in any bankruptcy or insolvency
      proceeding initiated by or against the Borrower and, further, agrees not to
      file
      any opposition to any motion for relief from stay filed by the
      Holder.  The Borrower represents, acknowledges and agrees that this
      provision is a specific and material aspect of the Loan Documents, and that
      the
      Holder would not agree to the terms of the Loan Documents if this waiver were
      not a part of this Note. The Borrower further represents, acknowledges and
      agrees that this waiver is knowingly, intelligently and voluntarily made, that
      neither the Holder nor any person acting on behalf of the Holder has made any
      representations to induce this waiver, that the Borrower has been represented
      (or has had the opportunity to he represented) in the signing of this Note
      and
      the Loan Documents and in the making of this waiver by independent legal counsel
      selected by the Borrower and that the Borrower has discussed this waiver with
      counsel.


    
      
        
        

      

      
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    ARTICLE
      V

    


    MISCELLANEOUS

    


    5.1           Failure
      or Indulgence Not Waiver.  No failure or delay on the part of
      Holder hereof in the exercise of any power, right or privilege hereunder shall
      operate as a waiver thereof, nor shall any single or partial exercise of any
      such power, right or privilege preclude other or further exercise thereof or
      of
      any other right, power or privilege.  All rights and remedies existing
      hereunder are cumulative to, and not exclusive of, any rights or remedies
      otherwise available.

    


    5.2           Notices.  All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice.  Any notice or other communication required or
      permitted to be given hereunder shall be deemed effective (a) upon hand delivery
      or delivery by facsimile, with accurate confirmation generated by the
      transmitting facsimile machine, at the address or number designated below (if
      delivered on a business day during normal business hours where such notice
      is to
      be received), or the first business day following such delivery (if delivered
      other than on a business day during normal business hours where such notice
      is
      to be received) or (b) on the second business day following the date of mailing
      by express courier service, fully prepaid, addressed to such address, or upon
      actual receipt of such mailing, whichever shall first occur.  The
      addresses for such communications shall be: (i) if to the Borrower to: Rim
      Semiconductor Company, 305 NE 102nd Avenue,
      Suite 350,
      Portland, Oregon 97220, Attn: Brad Ketch, CEO, telecopier: (503) 257-6700,
      with
      a copy, which shall not constitute notice, by telecopier only to: Lawrence
      B.
      Mandala, Esq., Munck Butrus Carter, P.C., 600 Banner Place, 12770 Coit Road,
      Dallas, TX 75251, telecopier: (972) 628-3616, and (ii) if to the Holder, to
      the
      name, address and telecopy number set forth on the front page of this Note,
      with
      a copy by telecopier only to Grushko & Mittman, P.C., 551 Fifth Avenue,
      Suite 1601, New York, New York 10176, telecopier number: (212)
      697-3575.

    


    5.3           Amendment
      Provision.  The term “Note” and all reference thereto, as used
      throughout this instrument, shall mean this instrument as originally executed,
      or if later amended or supplemented, then as so amended or
      supplemented.

    


    5.4           Assignability.  This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and
      assigns.

    


    5.5           Cost
      of Collection.  If default is made in the payment of this Note,
      Borrower shall pay the Holder hereof reasonable costs of collection, including
      reasonable attorneys’ fees.

    


    5.6           Governing
      Law.  This Note shall be governed by and construed in accordance
      with the laws of the State of New York.  Any action brought by either
      party against the other concerning the transactions contemplated by this
      Agreement shall be brought only in the state courts of New York or in the
      federal courts located in the state of New York.  Both parties and the
      individual signing this Agreement on behalf of the Borrower agree to submit
      to
      the jurisdiction of such courts.  The prevailing party shall be
      entitled to recover from the other party its reasonable attorney’s fees and
      costs.

    


    5.7           Maximum
      Payments.  Nothing contained herein shall be deemed to establish
      or require the payment of a rate of interest or other charges in excess of
      the
      maximum permitted by applicable law.  In the event that the rate of
      interest required to be paid or other charges hereunder exceed the maximum
      permitted by such law, any payments in excess of such maximum shall be credited
      against amounts owed by the Borrower to the Holder and thus refunded to the
      Borrower.


    
      
        
        

      

      
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    5.8           Shareholder
      Status.  The Holder shall not have rights as a shareholder of the
      Borrower with respect to unconverted portions of this Note.  However,
      the Holder will have all the rights of a shareholder of the Borrower with
      respect to the shares of Common Stock to be received by Holder after delivery
      by
      the Holder of a Conversion Notice to the Borrower.

    


    


    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

    



    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
      by an authorized officer as of the ____ day of December, 2007.

    
 

    
      	 	
              RIM
                SEMICONDUCTOR COMPANY

               

               

              
                By: _______________________________________________

                      
                  Name: __________________________________________

                      
                  Title: ___________________________________________

              

               

            


    

     

    


    


    


                                                                   

    WITNESS:

    
 

    ______________________________________


    
      
        
        

      

      
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    NOTICE
      OF CONVERSION

    


    (To
      be
      executed by the Registered Holder in order to convert the Note)

    


    


    The
      undersigned hereby elects to convert $_________ of the principal and $_________
      of the interest due on the Note issued by Rim Semiconductor Company on December
      5, 2007 into Shares of Common Stock of Rim Semiconductor Company (the
“Borrower”) according to the conditions set forth in such Note, as of the date
      written below.

    


    


    


    Date
      of
      Conversion:____________________________________________________________________

    


    


    Conversion
      Price:______________________________________________________________________

    


    


    Shares
      To
      Be
      Delivered:_________________________________________________________________

    


    


    Signature:____________________________________________________________________________

    


    


    Print
      Name: ___________________________________________________________________________

    


    


    Address:_____________________________________________________________________________

    


    _____________________________________________________________________________

    


     

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