EXHIBIT 4.04
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 13, 1996 (this
"Agreement"), is made by and between RADIUS INC., a California corporation (the
"Company"), and the person named on the signature page hereto (the "Initial
Investor").
W I T N E S S E T H:
WHEREAS, in connection with each of
the Subscription Agreements, between certain unsecured creditors of the Company
("Creditors") and the Company (the "Subscription Agreements"), the Company has
issued and sold to the Creditors shares (the "Shares") of Common Stock, no par
value (the "Common Stock") and certain Common Stock Purchase Rights ("Rights")
in satisfaction of certain claims of such Creditors as set forth in the
Subscription Agreements;
WHEREAS, the Company has issued to IBM Credit Corporation ("IBM Credit")
shares of Series A Convertible Preferred Stock (the "Series A Preferred") and
Warrants ("Warrants") to purchase 600,000 shares of Common Stock in satisfaction
of certain outstanding indebtedness of the Company to IBM Credit and extension
by IBM Credit of an advance of up to $500,000 as well as the restructuring of
the Company's remaining indebtedness to IBM Credit (such transactions with IBM
Credit are collectively referred to herein as the "Restructuring");
WHEREAS, the Company has issued or will issue to certain unsecured
creditors ("Key Suppliers") Warrants to purchase an aggregate of 600,000 shares
of Common Stock;
WHEREAS, to induce (i) the Creditors to execute and deliver the
Subscription Agreements, (ii) IBM Credit to enter into the Restructuring and,
(iii) the Key Suppliers to accept Warrants to ensure favorable credit and supply
terms, the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the "Securities Act"), and
applicable state securities laws with respect to the Registrable Securities
(defined below);
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investor hereby agree as follows:
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1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Demand Securities" means the Warrant Shares and the Dividend
Shares.
(b) "Demand Registration" means a registration effected pursuant to
Section 2(b) hereof.
(c) "Dividend Shares" means any shares of Common Stock issuable in
lieu of cash dividends paid or to be paid on the Series A Preferred.
(d) "Effectiveness Period" means with respect to (i) the Shelf
Registration, a period of 24 consecutive months from the effective date of the
Registration Statement relating to the Initial Registration and (ii) any Demand
Registration, a period of 90 consecutive days from the effective date of the
Demand Registration and excluding any period of time in which the Effectiveness
Period may be suspended pursuant to the provisions of clauses (i)-(iv) of
Section 3(a).
(e) "Form S-3" means such form under the Securities Act as is in
effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
(f) "Holdover Securities" means Registrable Securities which are held
by an Investor after the end of the Effectiveness Period for the Shelf
Registration and which Investor also holds Demand Securities.
(g) "Initial Registration" means a registration effected pursuant to
Section 2(a) hereof.
(h) "Investor" means the Initial Investor and any transferee or
assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(i) "register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and, to the extent required
hereunder, pursuant to Rule 415, and the declaration or ordering of
effectiveness of such Registration Statement by the SEC.
(j) "Registrable Securities" means the Shares, the Warrant Shares,
the Dividend Shares, the Rights Shares, the Series A Shares, the Series A
Preferred and the Warrants.
(k) "Registration Statement" means a registration statement of the
Company under the Securities Act with respect to the Shelf Registration or the
Demand Registration, as the case may be.
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(l) "Registration Termination Date" means the date on which the
Company's obligation to register or maintain any registration with respect to
any Registrable Securities terminates as provided in Section 11 hereof.
(m) "Rights Shares" means shares of Common Stock issued or issuable
pursuant to the Rights issued to the Creditors pursuant to the Subscription
Agreements.
(n) "Rule 144" means Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
(o) "Rule 415" means Rule 415 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
(p) "SEC" means the U.S. Securities and Exchange Commission.
(q) "Securities Act" means the Securities Act of 1933, as amended.
(r) "Series A Shares" means shares of Common Stock issued or issuable
upon conversion of the Series A Preferred.
(s) "Shelf Registration" means the Initial Registration and any
Subsequent Registration.
(t) "Subsequent Registration" has the meaning specified in Section 2
hereof.
(u) "Target Effective Date" means 60 days after the issuance of the
Shares.
(v) "Target Filing Date" means 10 days after the issuance of the
Shares.
(w) "Underwritten Offering" means an underwritten public offering on
a firm commitment basis.
(x) "Warrant Shares" means shares of Common Stock issued or issuable
upon exercise of the Warrants issued to IBM Credit and the Key Suppliers.
2. REGISTRATION.
(A) INITIAL REGISTRATION.
(i) The Company shall prepare and file with the SEC a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Registrable Securities. The Initial
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Securities for resale by such holders in the
manner or manners designated by them (including, without limitation, one or more
underwritten offerings). Such filing shall be made on or before the Target
Filing Date. The Company shall use its best efforts to have such Initial
Registration declared effective on or before the Target Effective Date and to
keep the Initial Registration continuously effective under the Securities Act
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until the earlier to occur of the date that is 24 months from the effectiveness
date of the Initial Registration (the "Initial Effectiveness Period") or the
Registration Termination Date.
(ii) If the Initial Registration or a Subsequent Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the occurrence of the Registration Termination
Date with respect to the Registrable Securities covered thereby), the Company
shall use its best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 30 days of
such cessation of effectiveness file an amendment to the Initial Registration in
a manner reasonably expected to obtain the withdrawal of the order suspending
the effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Securities (a "SUBSEQUENT
REGISTRATION"). If a Subsequent Registration is filed, the Company shall use
its best efforts to cause the Subsequent Registration to be declared effective
as soon as practicable after such filing and to keep such Registration Statement
continuously effective until the earlier to occur of the end of the
Effectiveness Period or the Registration Termination Date.
(iii) The Company shall supplement and amend the Shelf
Registration if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration, if
required by the Securities Act.
(B) DEMAND REGISTRATION.
(i) If the Company shall receive at any time after the end of
the Effectiveness Period for the Shelf Registration, a written request from the
Investors of at least thirty-three percent (33%) of the Demand Securities then
outstanding that the Company file a registration statement under the Securities
Act covering the registration of the Demand Securities pursuant to this Section
2(b), then the Company shall, within ten (10) business days of the receipt of
such written request, give written notice of such request ("REQUEST NOTICE") to
all Investors, and file within thirty (30) days and use its best efforts to
cause such Registration Statement to become effective within an additional
thirty (30) days, the Registration Statement covering all Demand Securities
which Investors request to be registered and included in such registration by
written notice given such Investors to the Company within twenty (20) days after
receipt of the Request Notice; PROVIDED that the Registrable Securities
requested by all Investors to be registered pursuant to such request must be at
least thirty-three percent (33%) of all Demand Securities then outstanding;
provided further, that in the event the proposed offering described in the
Request Notice is an Underwritten Offering, then additional Holdover Securities
(other than Warrants and Series A Preferred) held by Investors may be included
in the registration described in the Request Notice, subject to compliance with
subsection (ii) below.
(ii) If the Investors initiating the registration request under
this Section 2(b) ("INITIATING INVESTORS") intend to distribute the Demand
Securities covered by their request by means of an Underwritten Offering, then
they shall so advise the Company as a part of their request made pursuant to
this Section 2(b) and the Company shall include such information in the Request
Notice referred to in subsection (i) of this Section 2(b). In such event, the
right of any Investor to include his Demand Securities and, if applicable,
Holdover Securities in such
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registration shall be conditioned upon such Investor's participation in such
Underwritten Offering and the inclusion of such Investor's Demand Securities in
the Underwritten Offering (unless otherwise mutually agreed by a majority in
interest of the Initiating Investors and such Investor) to the extent provided
herein. All Investors proposing to distribute their securities through such
Underwritten Offering shall enter into an underwriting agreement in customary
form with the managing underwriter or underwriters selected for such
Underwritten Offering by the Company. Notwithstanding any other provision of
this Section 2(b), if the underwriter(s) advise(s) the Company in writing that
marketing factors require a limitation of the number of securities to be
underwritten then the Company shall so advise all Investors owning Demand
Securities and, if applicable, Holdover Securities, which would otherwise be
registered and underwritten pursuant hereto, and the number of Demand Securities
and, if applicable, Holdover Securities, that may be included in the
Underwritten Offering shall be reduced as required by the underwriter(s) and
allocated among the Investors owning Demand Securities and, if applicable,
Holdover Securities, on a pro rata basis according to the number of Demand
Securities and, if applicable, Holdover Securities, then outstanding held by
each Investor requesting registration (including the Initiating Investors).
(iii) MAXIMUM NUMBER OF DEMAND REGISTRATIONS. The Company is
obligated to effect only two (2) such registrations pursuant to this Section
2(b) in any calendar year.
(iv) DEFERRAL. Notwithstanding the foregoing, if the Company
shall furnish to Investors requesting a Demand Registration, a certificate
signed by the President or Chief Executive Officer of the Company stating that
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, then the Company shall have the right to defer such
filing for a period of not more than one hundred twenty (120) days after receipt
of the request of the Initiating Investors; PROVIDED, HOWEVER, that the Company
may not utilize this right more than once in any twelve (12) month period.
(v) FORM S-3 REGISTRATION. In lieu of the Company's obligation
to effect Demand Registrations pursuant to this Section 2(b), the Company may,
at its election, at any time after the Effectiveness Period of the Shelf
Registration, prepare, file and cause to be effective a Registration Statement
on Form S-3, and subject to the provisions of Section 3(a), keep such
Registration Statement effective pursuant to Rule 415 until the Registration
Termination Date. Upon the effectiveness of such Registration Statement on Form
S-3, the Investors shall no longer be permitted to effect a Demand Registration.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration of
the Registrable Securities pursuant to this Agreement, the Company shall:
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(a) prepare promptly and file with the SEC promptly (but in no event
later than as is set forth in Section 2 hereof) a Registration Statement with
respect to all Registrable Securities to be included therein, and thereafter use
its best efforts to cause the Registration Statement to become effective as soon
as reasonably possible after such filing, and keep the Registration Statement
effective pursuant to Rule 415 (except in the case of an underwritten offering,
for which Rule 415 will not be used) at all times during the Effectiveness
Period or until the Registration Termination Date, whichever occurs first, which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading PROVIDED, HOWEVER, that each Investor shall have
complied with its obligations under Section 4 with respect to the Registrable
Securities of such Investor to be included in the Registration Statement.
Notwithstanding the foregoing, in the event that (i) any request is made by the
SEC or any other federal or state governmental authority during the
Effectiveness Period for amendments or supplements to a Registration Statement
or related prospectus, (ii) any event occurs that makes any statement made in
such Registration Statement or related prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or which requires the making of any changes in the Registration Statement or
prospectus so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, (iii) during the Effective Period for the Shelf
Registration, the Company becomes eligible to utilize From S-3 (in which case,
the Company shall be permitted to terminate the effectiveness of the Initial
Registration and file a Registration Statement on Form S-3 and use its best
efforts to cause such Registration Statement to become effective within thirty
(30) days with respect to the Registrable Securities), or (iv) in the judgment
of the Company, it is advisable to suspend use of the prospectus included in
such Registration Statement for a discrete period of time due to pending
corporate developments (including the pending automatic conversion of the Series
A Shares referred to in Section 7.2(a) of Article III of the Company's Articles
of Incorporation, as amended, in which case such discrete period shall be one
day), public filings with the SEC or similar events, then the Company shall
deliver a certificate in writing to the Investors whose Registrable Securities
are included in the Registration Statement to the effect of the foregoing and,
upon receipt of such certificate, the use of the Registration Statement and
prospectus will be deferred or suspended and will not recommence until such
Investor's receipt of copies of the supplemented or amended prospectus, or until
such Investors are advised in writing by the Company that the prospectus may be
used, and until such Investors have received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such prospectus. The Company will use its best efforts to ensure that the
use of the Registration Statement and prospectus may be resumed, as soon as
practicable and, in the case of a pending development, filing or event referred
to in (iv) above, as soon, in the judgment of the Company, as disclosure of the
material information relating to such pending development, filing or event would
not have a materially adverse effect on the Company's ability to consummate the
transaction, if any, to which such development, filing or event relates.
Notwithstanding the foregoing or any other provision of this Agreement, the
period during which the Company shall be required to maintain the effectiveness
of a
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Registration Statement with respect to a Demand Registration shall be extended
by 1 day for each full or partial day during which the use of such Registration
Statement or prospectus is deferred or suspended by the Company in accordance
with this Section 2(b);
(b) prepare and file with the SEC such amendments (including post-
effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Shelf Registration or Demand Registration effective at all
times until the end of the Effectiveness Period or the Registration Termination
Date, whichever occurs first, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents, as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Investor;
(d) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Shelf Registration or Demand Registration
under such other securities or blue sky laws of such jurisdictions as the
Investors who hold a majority in interest of the Registrable Securities or
Demand Securities, as applicable, being offered reasonably request, (ii) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all times until
the end of the Effectiveness Period or the Registration Termination Date,
whichever occurs first, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities or Demand Securities, as
applicable, for sale in such jurisdictions; PROVIDED, HOWEVER, that the Company
shall not be required in connection therewith or as a condition thereto to (I)
quality to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any such jurisdiction, (IV) provide any undertakings that cause more
than nominal expense or burden to the Company or (V) make any change in its
charter or by-laws;
(e) as promptly as practicable after becoming aware of such event,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Shelf
Registration or Demand Registration, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and deliver a number of
copies of such supplement or amendment to each Investor as such Investor may
reasonably request;
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(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an Underwritten Offering, the managing underwriters) of the issuance by
the SEC (or any state agency) of any stop order or other suspension of
effectiveness of any Registration Statement (or state qualification) at the
earliest possible time;
(g) permit a single firm of counsel designated as selling
shareholders' counsel by the Investors to review a Registration Statement and
all amendments and supplements thereto a reasonable period of time prior to
their filing with the SEC, PROVIDED, HOWEVER, any such objection to the filing
of any Registration Statement or amendment thereto or any prospectus or
supplement thereto shall be made by written notice (the "Objection Notice")
delivered to the Company no later than three (3) Business Days after the party
or parties asserting such objection receives draft copies of the documents that
the Company proposes to file. The Objection Notice shall set forth the
objections and the specific areas in the draft documents where such objections
arise, and shall not file any document in a form to which such counsel
reasonably objects, PROVIDED that the Company shall be permitted to take such
actions that are required to comply with applicable law;
(h) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next following the
effective date of any Registration Statement and any post effective amendment
thereto;
(i) make available for inspection by any Investor, any underwriter
participating to any Underwritten Offering, and any attorney, accountant or
other agent retained by any such Investor or underwriter (collectively, the
"Inspectors"), all pertinent documents of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable each Inspector to
exercise its due diligence responsibility, if and to the extent it has any such
responsibility under the Securities Act, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; PROVIDED, HOWEVER, that
each Inspector shall hold in confidence and shall not make any disclosure
(except to an Investor) of any Record or other non-public information relating
to the Company received by such Inspector unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement; and PROVIDED FURTHER, HOWEVER, that in the event any Investor
obtains material nonpublic information concerning the Company pursuant to this
Section 3(i) or Section 3(a) or 3(e) or otherwise, such Investor shall not
purchase or sell or otherwise trade in any securities of the Company in
violation of applicable law until such information is made public by the
Company. The Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such Inspector
shall have entered into confidentiality agreements (in form and substance
satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(i). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of
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competent jurisdiction, given prompt notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, the Records deemed confidential;
(j) use its best efforts either to (i) cause all the Registrable
Securities covered by any Registration Statement to be listed on a national
securities exchange, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) secure the quotation of the
Registrable Securities on the Nasdaq National Market if such quotation is then
permitted under the rules of the Nasdaq;
(k) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of any
Registration Statement;
(l) cooperate with the Investors who hold Registrable Securities
being sold and the managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold pursuant to the Shelf
Registration or Demand Registration, as the case may be, and enable such
certificates to be in such denominations or amounts as the case may be, and
registered in such names as the managing underwriter or underwriters, if any, or
the Investors may reasonable request; and
(m) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to any
Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to the effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least fifteen (15) days prior to the first anticipated
filing date of the Shelf Registration or the Demand Registration, as the case
may be, the Company shall notify each Investor of the information the Company
requires from each such Investor (the "REQUESTED INFORMATION") if such Investor
elects to have any of such Investor's Registrable Securities included in the
Registration Statement. If within five (5) business days prior to the filing
date the Company has not received the Requested Information from an Investor (a
"NON-RESPONSIVE INVESTOR"), then the Company may file the Shelf Registration or
the Demand Registration, as the case may be, without including Registrable
Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
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(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of any kind described in Section 3(e) or
3(f), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or 3(f) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice;
(d) No Investor may participate in any Underwritten Offering
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Investors entitled hereunder to approve such arrangements, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and other fees and expenses of investment
bankers and any manager or managers of such underwriting and legal expenses of
the underwriters applicable with respect to its Registrable Securities, in each
case to the extent not payable by the Company pursuant to the terms of this
Agreement;
(e) No Investor shall include the Investor's Registrable Securities
in any Registration Statement relating to a Demand Registration unless the
Investor has at such time a current intent to sell such Registrable Securities,
and by including such Registrable Securities in such Registration Statement, the
Investor will be deemed to represent to the Company that the Investor has such
intent. Any sale of any Registrable Securities by any Investor under any
Registration Statement will constitute a representation and warranty by such
Investor that the information relating to such Investor and its plan of
distribution is as set forth in the prospectus prepared by the Company and
furnished to such Investor for use in connection with such disposition, and such
prospectus does not as of the time of such sale contain any untrue statement of
a material fact relating to such Investor or its plan of distribution and that
such prospectus does not as of the time of such sale omit to state any material
fact relating to such Investor or its plan of distribution necessary to make the
statements in such Prospectus, in light of the circumstances under which they
were made, not misleading;
(f) Each Investor agrees that, in disposing of any Registrable
Securities pursuant to any Registration Statement, the Investor will cause the
disposition to be made in accordance with the terms of the Registration
Statement, including the plan of distribution described therein, and will comply
with all applicable securities laws, including Rules 10b-2, 10b-5, 10b-6 and
10b-7 promulgated under the Exchange Act. Each Investor agrees that in selling
any Registrable Securities under any Registration Statement, the Investor will
deliver the current prospectus contained in the Registration Statement, as
amended and supplemented, to all persons as required by the Securities Act and
the regulations thereunder and will comply with any applicable "blue sky" laws
and regulations in connection with the disposition of such shares.
(g) Each Investor hereby agrees that it shall not, to the extent
requested by an underwriter of securities of the Company, sell or otherwise
transfer or dispose of any Registrable
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Securities or other securities of the Company then owned by such Investor (other
than to donees or affiliates of the Investor who agree to be similarly bound)
for up to one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act; PROVIDED,
HOWEVER, that all executive officers and directors of the Company then holding
Common Stock of the Company enter into similar agreements. In order to enforce
the foregoing covenant, the Company shall have the right to place restrictive
legends on the certificates representing the shares subject to this Section and
to impose stop transfer instructions with respect to the Registrable Securities
and such other shares of stock of each Investor (and the shares or securities of
every other person subject to the foregoing restriction) until the end of such
period.
5. EXPENSES OF REGISTRATION. All expenses, other than underwriting
discounts and commissions and brokerage commissions and other fees and expenses
of investment bankers, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees and
the fees and disbursements of counsel for the Company and counsel for the
Investors as provided in Section 3(g), shall be borne by the Company; PROVIDED,
HOWEVER, that the Investors shall bear the fees and out-of-pocket expenses of
their legal counsel, if any, selected by the Investors pursuant to Subsection
(ii) of Section 2(b) hereof in the case of an Underwritten Offering.
Notwithstanding the foregoing, the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to this Section 2(b) if
the registration request is subsequently withdrawn at the request of the
Investors of a majority of the Demand Securities to be registered, unless the
Investors of a majority of the Demand Securities then outstanding agree to
forfeit their right to one (1) demand registration pursuant to this Section 2(b)
(in which case such right shall be forfeited by all Investors holding Demand
Securities).
6. INDEMNIFICATION. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act, and, in the case of a Demand Registration,
if the Registration Statement is for an underwritten offering, any underwriter
(as defined in the Securities Act) for the Investors, the directors, if any, of
such underwriter and the officers, if any, of such underwriter, and each person,
if any, who controls any such underwriter within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Person"), against any losses,
claims, damages, expenses or liabilities (joint or several) (collectively,
"Claims") to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations in any
Registration Statement, or any post-effective amendment thereof, or any
prospectus included therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or any
post-effective amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or
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necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act, any state securities law or any
rule or regulation by the Company of the Securities Act, the Exchange Act or any
state securities law (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Subject to the restrictions set forth in
Section 6(d) with respect to the number of legal counsel, the Company shall
reimburse the Indemnified Persons, promptly as such expense are incurred and are
due and payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (I) shall not apply to a Claim
arising out of or based upon (A) a Violation which occurs in reliance upon and
in conformity with information furnished in writing to the Company by any
Indemnified Person or underwriter for such Indemnified Person (to the extent
such information was provided by or on behalf of such Indemnified
Person)expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof or (B) any violation by an Investor of the Investor's obligations under
this Agreement; (II) with respect to any preliminary prospectus shall not inure
to the benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(c) hereof; and (III)
shall not apply to amounts paid in settlement of any claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld, PROVIDED, HOWEVER, that if such claim is settled
without the consent of the Company and such claim is subsequently reduced to a
final, non appealable judgment or settlement which is adverse to the Company,
then the provisions of this clause III shall be of no effect. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act, any other shareholder and, in
the case of a Demand Registration, any underwriter selling securities pursuant
to the Registration Statement or any of its directors or officers or any person
who controls such shareholder or underwriter within the meaning of the
Securities Act or the Exchange Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon (i) any
Violation, in each case to the extent (and only to
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the extent) that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and such Investor will reimburse
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim or (ii) any violation by any Investor
of such Investor's obligations under this Agreement; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying parties; PROVIDED, HOWEVER, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel, with the
reasonable fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
conflicts of interests between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding. The Company
shall pay for only one separate legal counsel for the Indemnified Persons; such
legal counsel shall be selected by the Investors holding a majority in interest
of the Registrable Securities and shall be approved by the Company, such
approval not to be unreasonably withheld. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution
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with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; PROVIDED, HOWEVER, that (a) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6, (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation and (c) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities other than Rights Shares pursuant to this
Agreement shall be automatically assigned by the Investors to transferees or
assignees of all of any portion of such securities only if: (a) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment, (b) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and applicable state securities laws, and (d) at or before the time the
Company received the written notice contemplated by clause (b) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein and (e) the transfer or assignment is made in
compliance with the transfer restrictions in any Subscription Agreement, Rights
Agreement, Warrant Agreement, or Series A Preferred Purchase Agreement, as
applicable.
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10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority in interest of
the Registrable Securities with each share of Series A Preferred and each Series
A Share being treated as one security and each Warrant and each Warrant Share
being treated as one security. Any amendment or waiver effected in accordance
with this Section 10 shall be binding upon each Investor and the Company.
11. TERM. The term of this Agreement and the obligations of the parties
hereunder (other than their obligations under Sections 5, 6 and 7, which will
continue) will end (the "Registration Termination Date") (i) with respect to
Registrable Securities other than Demand Shares or Holdover Securities, on the
earlier to occur of (A) the sale of the Registrable Securities, or (B) at the
end of the Effectiveness Period for the Shelf Registration, and (ii) with
respect to the Demand Shares and Holdover Securities, on the earlier to occur of
(A) the sale of the Demand Securities and Holdover Securities, or (B) 24 months
from the date of issuance of such securities. In no event will the Company be
required to register hereunder or maintain any registration hereunder of any
Registrable Securities that are then eligible for resale under Rule 144.
12. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
(by hand, by courier or overnight delivery service, by telephone, facsimile
transmission or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage prepaid (i) if to the
Company, at Radius Inc., 215 Moffett Park Drive, Sunnyvale, California 94089,
Attention: President, (ii) if to the Initial Investor, at the address set forth
under its name in the Subscription Agreement and (iii) if to any other Investor,
at such address as such Investor shall have provided in writing to the Company,
or at such other address as each such party furnishes by notice given in
accordance with this Section 12(b), and shall be effective, when personally
delivered, upon receipt and, when so sent by certified mail, four days after
deposit with the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a wavier thereof.
(d) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of California applicable to agreements
made and to be performed entirely within such State. In the event that any
provision of this Agreement is invalid
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or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision
hereof.
(e) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
RADIUS INC.
By:
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Name:
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Title:
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INITIAL INVESTOR:
Name:
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By:
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Name:
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Title:
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Permanent Address:
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Taxpayer Identification Number
(required by transfer agent):
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