EXHIBIT 4.07
FORM OF
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of the date of acceptance set forth
below, by and between RADIUS INC., a California corporation, with headquarters
located at 215 Moffett Park Drive, Sunnyvale, California 94089 (the "COMPANY"),
and the undersigned (the "BUYER").
W I T N E S S E T H:
WHEREAS, the Buyer maintains that the Company is delinquent to Buyer in
certain accounts or other claims in the amount of $________ (the "Obligation")
which Obligation represents all amounts owed to Buyer for whatever reason by the
Company other than current trade payables of $________ as specified in a
schedule attached to this Agreement ("Buyer's Schedule of Current Accounts");
WHEREAS, as a result of the Company's current financial condition, the
Company is unable to repay the Obligation along with approximately $45 million
of claims of other unsecured creditors of the Company;
WHEREAS, the Company, its secured creditor and an unofficial committee of
its largest unsecured creditors have proposed a plan pursuant to which unsecured
creditors will release their claims against the Company in exchange for a number
of shares of the Company's Common Stock, no par value ("Common Stock"), equal to
60% of the issued and outstanding shares of Common Stock;
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("REGULATION D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
WHEREAS, the Buyer wishes to subscribe for and purchase shares of Common
Stock in full satisfaction of the Obligation and the release the Company from
any and all liability relating to the Obligation upon the terms and subject to
the conditions of this Agreement, subject to acceptance of this Agreement by the
Company;
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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 parties agree as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
A. SUBSCRIPTION. Buyer hereby subscribes for and agrees to purchase
the number of shares of Common Stock set forth on the signature page of this
Agreement (the "Shares") in full satisfaction of the Obligation. Subscriber
understands that the number of shares of Common Stock to be received will
represent its pro rata share of the 60% of the outstanding shares of the
Company's Common Stock to be issued to the Company's unsecured creditors as of
the Closing Date (defined below).
B. RELEASE. Buyer accepts the Common Stock as full satisfaction of the
Obligation, and upon receipt of the Common Stock and an executed Registration
Rights Agreement, Buyer forever fully releases and discharges the Company, its
predecessors, successors, subsidiaries, officers, directors, agents, attorneys,
employees, lenders, creditors , shareholders and assigns ("Releasees") from any
and all causes of action, claims, suits, demands or other obligations or
liabilities (except those set forth in the attached Buyer's Schedule of Current
Accounts, if any), whether known or unknown, that Buyer ever had, now has, or
may in the future have, that may be alleged to arise out of or in connection
with the Obligation or its satisfaction ("Claims"). Buyer also agrees not to
sue or otherwise institute or cause to be instituted or in any way participate
in legal or administrative proceedings against the Releasees with respect to the
Claims (except at the reasonable request of the Company). This release extends
to all claims of every nature and kind, known or unknown, suspected or
unsuspected, past, present, or future, arising from or related to the Obligation
or its satisfaction, and any and all rights granted to us under Section 1542 of
the California Civil Code or any analogous state law or federal law or
regulation hereby expressly waived. Section 1542 of the Civil Code of the State
of California states: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IS KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.
Buyer understands that other creditors and the Company will rely on its
agreement to accept the Common Stock in full satisfaction of the Obligation and
in consideration of the release described above. The adequacy of this
consideration is acknowledged and will never be challenged.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with, the
Company as follows:
a. The Buyer is purchasing the Shares for its own account for investment
only and not with a view towards the public sale or distribution thereof;
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b. The Buyer is an "Accredited Investor" as that term is defined in Rule
501 of the General Rules and Regulations under the 1933 Act by reason of Rule
501(a)(3) and is experienced and knowledgeable in investing in equity and other
securities;
c. All subsequent offers and sales of the Shares by the Buyer shall be
made pursuant to registration under the 1933 Act and qualification under the
applicable state securities laws or pursuant to an exemptions from registration
and qualification;
d. The Buyer understands that the Shares are being offered and sold to it
in reliance on specific exemptions from the registration and qualification
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Shares;
e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Shares which have been requested
by the Buyer. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Buyer has had the opportunity to obtain and to review the
Company's Preliminary Confidential Private Placement Memorandum dated August 9,
1996 relating to the offering of the Shares (the "MEMORANDUM") and the exhibits
to the Memorandum. The Buyer acknowledges that the Company may sell securities
pursuant to the Memorandum or otherwise that are similar to or different than
the securities referred to in the Memorandum, and on terms that are similar to
or different than those set forth in the Memorandum and those of this Agreement.
The Buyer understands that its investment in the Shares involves a high degree
of risk;
f. The Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares; and
g.Each of this Agreement and the Release has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding
agreement of the Buyer enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
A. CONCERNING THE SHARES. The Shares, when issued, delivered and paid
for in accordance with this Agreement, will be duly and validly authorized and
issued, fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder. There are no preemptive
rights of any shareholder of the Company, as such, to acquire the Shares.
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B. SUBSCRIPTION AGREEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Company and is a valid and
binding agreement of the Company enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
C. NON-CONTRAVENTION. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the issuance of the Shares
and the other transactions contemplated by this Agreement do not and will not
conflict with or result in a breach by the Company of any of the terms or
provisions of, or constitute a default under, the articles of incorporation or
by-laws of the Company, or any indenture, mortgage, deed of trust or other
material agreement or instrument to which the Company is a party or by which it
or any of its properties or assets are bound, or any existing applicable law,
rule or regulation or any applicable decree, judgment or order of any court,
United States federal or state regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or any of its properties
or assets.
D. APPROVALS. The Company is not aware of any authorization, approval or
consent of any governmental body which is required to be obtained by the Company
(other than the approval of the Company's shareholders of an amendment to the
Company's Articles of Incorporation to approve an increase in the authorized
number of shares of Common Stock of the Company) for the issuance and sale of
the Shares as contemplated by this Agreement.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. TRANSFER RESTRICTIONS. The Buyer acknowledges that (1) the Shares to
be issued to it hereunder have not been and are not being registered under the
provisions of the 1933 Act or qualified under applicable state securities laws
(except to the extent provided for in the Registration Rights Agreement referred
to in Section 4(c) of this Agreement), and may not be transferred unless and
until (A) such transfer is registered under the 1933 Act and qualified under
applicable state securities laws or (B) the Buyer shall have delivered to the
Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Shares may be sold or
transferred pursuant to exemptions from such registration and qualification;
(2) any sale of the Shares made in reliance on Rule 144 promulgated under the
1933 Act may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of such Shares under circumstances in
which the seller, or the person through whom the sale is made, may be deemed to
be an underwriter, as that term is used in the 1933 Act, may require compliance
with some other exemption under the 1993 Act or the rules and regulations of the
SEC thereunder; and (3) neither the Company nor any other person is under any
obligations to register the Shares under the 1933 Act or qualify them under
state securities laws (other than pursuant to the Registration Rights Agreement
referred to in Section 4(c) of this Agreement) or to comply with the terms and
conditions of any exemption under the 1933 Act or applicable state securities
laws.
B. RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that, except
during such time as the Shares are registered under the 1933 Act and qualified
under applicable state securities laws as provided in the Registration Rights
Agreement referred to in Section 4(c) of
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this Agreement, or after the Shares have been sold pursuant to such registration
and qualification or pursuant to exemptions (such as Rule 144) that do not
require further restrictions on transfer, the certificates for the Shares may
bear a restrictive legend in substantially the following form (and a stop-
transfer order may be placed against transfer of the certificates for the
Shares):
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended
(the "1933 Act"), or applicable state securities laws. The shares
have been acquired for investment and may not be sold, transferred,
assigned or hypothecated unless registered under the 1933 Act and
qualified under applicable state securities laws or unless such sale,
transfer, argument or hypothecation is exempt from the registration
requirements of the 1933 Act and the qualification requirements of
applicable state securities laws and, at the Company's election,
unless the Company receives an opinion of counsel satisfactory to the
Company that such registration and qualification are not required.
C. REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to enter into
a Registration Rights Agreement in form acceptable to the Company and the
Unofficial Creditors Committee on or before the Closing Date.
D. FORM D. The Company agrees to file a Form D with respect to the
Shares as required under Regulation D.
E. REPORTING STATUS. So long as the Buyer beneficially owns any of the
Shares or until the third anniversary of the Closing Date, whichever first
occurs, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.
5. TRANSFER AGENT INSTRUCTIONS.
Promptly following the Closing, the Company will instruct its transfer
agent to issue one or more certificates for the Shares, bearing the restrictive
legend specified in Section 4(b) of this Agreement, registered in the name of
the Buyer or its nominee and in such denominations to be specified by the Buyer
prior to the closing. The Company warrants that no instruction (other than such
instructions referred to in this Section 5, instructions consistent with this
Agreement, including Sections 4(a) and 4(b) hereof, or with the Registration
Rights Agreement and stop transfer instructions to give effect to Section 4(a)
hereof) will be given by the Company to the transfer agent with respect to the
Shares and that the Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this Agreement.
Nothing in this Section shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Shares. If the Buyer sells the Shares under an effective Registration Statement
or if Buyer provides the Company with an opinion of counsel that registration
and qualification of a resale by the Buyer of any of the Shares in accordance
with clause (1)(B) of Section 4(a) of this Agreement is not required under the
1933 Act, the Company shall permit the transfer of such Shares and promptly
instruct the Company's transfer
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agent to issue one or more share certificates in such name and in such
denominations as specified by the Buyer (provided that such specification is
consistent with such opinion).
6. CLOSING DATE.
The date and time of the issuance and sale of the Shares (the "Closing
Date") shall be 12:00 noon, California time, on the date which: (i) the Company
has received Subscription Agreements from all unsecured creditors with claims in
excess of $50,000; (ii) the Company has executed and delivered an amended loan
agreement with IBM Credit Corporation in form acceptable to the Unofficial
Creditors Committee; and (iii) unsecured creditors other than those described in
(i) above holding claims representing 95% of all remaining unsecured claims
against the Company have received a discounted cash payment or have agreed to
receive shares of Common Stock in satisfaction of their claims. The foregoing
conditions may be waived or modified with the consent of each of the Company,
IBM Credit Corporation and the Unofficial Creditors Committee. The closing
shall occur on the Closing Date at the offices of the Company and is expected to
occur at the end of August 1996. Unless Buyer is issued Common Stock by
October 31, 1996, however, Buyer reserves the right to cancel this agreement by
written notice to the Company. Buyer also understands that the Company may be
forced to seek bankruptcy protection in order to implement the transactions
contemplated by this Agreement. In such event, additional documentation will be
sent to Buyer.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the Shares to
the Buyer pursuant to this Agreement is conditioned upon:
a. The receipt and acceptance by the Company of the Buyer's subscription
for the Shares as evidenced by execution and delivery of this Agreement by the
Company;
b. Satisfaction of the conditions referred to in Section 6 hereof;
c. The accuracy on the Closing Date of the representations and warranties
of the Buyer contained in this Agreement and the performance by the Buyer on or
before the Closing Date of all covenants and agreements of the Buyer required to
be performed on or before such Closing Date; and
d. Execution and delivery of a Registration Rights Agreement by Buyer.
The foregoing conditions may be waived by the Company at its discretion.
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the Shares
is conditioned upon:
a. Delivery by the Company of one or more certificates for the Shares in
accordance with this Agreement;
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b. The accuracy on the Closing Date of the representations and warranties
of the Company contained in this Agreement and the performance by the Company on
or before the Closing Date of all covenants and agreements of the Company
required to be performed on or before such Closing Date; and
c. Execution and delivery of the Registration Rights Agreement by the
Company.
The foregoing conditions may be waived by the Buyer at its discretion.
9. GOVERNING LAW; MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of California. A facsimile transmission of this signed
agreement shall be legal and binding on all parties hereto. The headings of
this Agreement are for convenience of reference and shall not form part of, or
affect the interpretation of, this Agreement. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. Any notices
required or permitted to be given under the terms of this Agreement shall be
sent by mail or delivered personally or by courier and shall be effective five
days after being placed in the mail, if mailed, or upon receipt, if delivered
personally or by courier to such party's office, in each case addressed to a
party at such party's address shown in the introductory paragraph or on the
signature page of this Agreement or such other address as a party shall have
provided by notice to the other party in accordance with this provision.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer or
one of its officers thereunto duly authorized as of the date set forth below.
AGGREGATE AMOUNT OF ALL RELEASED CLAIMS: $
NAME OF BUYER:
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SIGNATURE
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Title:
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Date:
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Address:
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This Agreement has been accepted as of the date set forth below.
RADIUS INC.
By:
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Title:
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Date:
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NUMBER OF SHARES:
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Such number of shares will be computed by the Company and confirmed by the
Unsecured Creditors Committee. Each unsecured creditor shall receive such
number of shares of Common Stock as represents its pro rata share of the 60% of
the outstanding shares of Common Stock as of the Closing Date.
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