rim_8k-080107.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date
of
Report (Date of earliest event reported): July 26, 2007
RIM
SEMICONDUCTOR COMPANY
(Exact
name of registrant as specified in its charter)
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Utah
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000-21785
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95-4545704
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
incorporation)
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Identification
No.)
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305
NE 102nd Ave, Suite 105, Portland, OR 97220
(Address
of principal executive offices, including Zip Code)
(503)
257-6700
(Registrant’s
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
0
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
0
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
0
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
0
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
ITEM
2.03 CREATION OF A DIRECT
FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT
OF
A REGISTRANT;
ITEM
3.02 UNREGISTERED SALES OF
EQUITY SECURITIES
On
July
27, 2007, the Company entered into a Bridge Loan Agreement (the “Loan
Agreement”), dated as of July 26, 2007 with Double U Master Fund, L.P. (“Double
U”) and Professional Offshore Opportunity Fund Ltd. (“Professional Offshore”),
two institutional investors (each,a “Lender”), pursuant to which the Lenders
loaned the Company a total of $1,000,000. After the payment of
transaction related fees and expenses of $105,000, and repayment of an April
2007 loan to the Company by Double U, the Company received net proceeds of
$571,000. The net proceeds will be used for general corporate
purposes.
Pursuant
to the Loan Agreement, the Company issued to each Lender a secured
promissory note in the principal amount of $550,000 (aggregate $1,100,000;
each,
a “Note”), representing an original issue discount of 10%. Each Note
will mature on the date (the “Maturity Date”) which is the earlier of (i)
December 24, 2007, or (ii) the date the Company effects a subsequent financing
that, individually or when combined with other financings completed by the
Company after July 26, 2007, results in gross proceeds to the Company of at
least $3 million. In addition, a Lender may accelerate the Maturity
Date in the event of a material default under the terms of the
Note. Prior to the Maturity Date, the Company may, at its option,
prepay the Notes in whole or in part. If not paid at maturity,
interest on the Notes will accrue at 24% per annum from the Maturity Date until
the actual date of payment.
Under
the
terms of the Notes, the holder may declare its Note immediately due and payable
upon the occurrence of an event of default (as defined in the Note), including
without limitation the following: (i) the Company’s failure to pay principal or
other amounts due under the Note when due, (ii) the Company’s material breach of
any of its representations or warranties made in the Loan Agreement, the Notes
or the other transaction documents, (iii) the Company’s failure to observe any
undertaking contained in the Notes or the other transaction documents in a
material respect if such failure continues for 30 calendar days after notice,
(iv) the Company’s insolvency or liquidation or a bankruptcy event, or (v) the
entry of a money judgment, writ of attachment or similar process in excess
of
$750,000 if such judgment, writ of attachment or similar process remains
unvacated for 60 days. In addition, upon an event of default, the
Note becomes convertible into shares of the Company’s common stock, subject to
certain conditions provided in Appendix I to the Note, at a conversion price
equal to the greater of: (i) 75% of the average closing price of the common
stock for the five trading days preceding the applicable conversion date, or
(ii) $0.01 (subject to adjustment as provided in Appendix I to the Note), and
the Company incurs the share registration obligations set forth in Appendix
I to
the Note.
To
secure
the Company’s obligations under the Loan Agreement, the Company granted a
security interest in substantially all of its assets, including without
limitation, its intellectual property, in favor of the Lenders under the terms
and conditions of a Security Interest Agreement (the “Security Agreement”) dated
as of the date of the Loan Agreement. The security interest
terminates upon payment or satisfaction of all of the Company’s obligations
under the Notes.
In
connection with the Loan Agreement, the Company issued to the Lenders 10 million
(10,000,000) unregistered shares of the Company’s common stock.
The
Notes
and common stock issued in this transaction have not been registered under
the
Securities Act of 1933, as amended (the “Act”) and may not be offered or sold in
the United States in the absence of an effective registration statement or
exemption from the registration requirements under the Act. The
Company is not under any obligation to register any of such securities absent
an
event of default under the Note. The Company believes that the
issuance of the foregoing securities was exempt from registration under Section
4(2) of the Act as a transaction not involving a public offering.
The
foregoing description is qualified in its entirety by reference to the Bridge
Loan Agreement, Form of Note and Security Interest Agreement attached hereto
as
Exhibits 10.1, 10.2,and 10.3 respectively, and incorporated herein by
reference.
Double
U
was the purchaser of $225,000 principal amount of the Company’s 7% Secured
Convertible Debentures due May 2008 issued in May 2005 (the “2005 Debentures”)
and $1,000,000 principal amount of the Company’s 7% Secured Convertible
Debentures due in March 2008 issued in March 2006 (the “2006 Debentures” and
collectively with the 2005 Debentures, the
“Debentures”). Professional Offshore was the purchaser of $350,000
principal amount of the 2006 Debentures. In connection with the
purchase of the Debentures, the Lenders received warrants to purchase shares
of
the Company’s common stock. As
of the
date of this report, the Lenders hold, in the aggregate, $425,000 principal
amount of 2006 Debentures. The remainder of the Debentures initially
purchased by the Lenders were previously converted into shares of the Company’s
common stock and are no longer outstanding. In addition, in April 2007,
Double U entered into a bridge loan transaction with the Company, in which
Double U loaned the Company $300,000 (the “Prior Loan”). $324.000 of
the proceeds from the loan described in this Current Report on Form 8-K went
to
repay the Prior Loan, which was to mature on July 31, 2007. Except
for the above-described investments in the Company, there is no material
relationship between the Lenders, on the one hand, and the Company or any of
its
affiliates on the other hand. See the Company’s Registration
Statement on Form SB-2/A (Reg. No. 333-133508) and the Prospectus filed by
the
Company dated August 16, 2006, for a description of the Debentures and the
Company’s agreements with the holders thereof.
ITEM
9.01. FINANCIAL
STATEMENTS AND EXHIBITS
(c)
Exhibits:
| Exhibit |
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| Number |
Description |
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10.1
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Bridge
Loan Agreement dated as of July 26, 2007 by and between Rim Semiconductor
Company and the Lenders parties thereto*
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10.2
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Form
of Senior Secured Promissory Note*
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10.3
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Security
Interest Agreement dated as of July 26, 2007 by and among the Secured
Parties (as defined in the Agreement), Rim Semiconductor Company,
and
Krieger & Prager, LLP, as agent for the Secured
Parties*
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____________________
* Filed
herewith
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Rim
Semiconductor Company
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Dated:
August 1, 2007
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By:
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/s/
Brad Ketch
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Brad
Ketch
President
and Chief Executive Officer
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Exhibit
Index
| Exhibit |
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| Number |
Description |
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10.1
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Bridge
Loan Agreement dated as of July 26, 2007 by and between Rim Semiconductor
Company and the Lenders parties thereto*
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10.2
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Form
of Senior Secured Promissory Note*
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10.3
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Security
Interest Agreement dated as of July 26, 2007 by and among the Secured
Parties (as defined in the Agreement), Rim Semiconductor Company,
and
Krieger & Prager, LLP, as agent for the Secured
Parties*
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______________
* Filed
herewith