EXHIBIT 2
July 11, 1996
Xxxxxxx X. Xxxxxxxx, Esq.
Wright, Robinson, Xxxxxxxx & Xxxxx
00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Xxxxxx X. Xxxxxxxx, Esq.
Steefel, Xxxxxx & Xxxxx
Xxx Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Re:
Recapitalization of Radius, Inc.
Gentlemen:
Attached you will find the final draft of the Term Sheet
containing the agreement in principle which we believe has
been reached regarding the recapitalization of Radius,
Inc. The Term Sheet contemplates that the recapitalization
will be accomplished by an out of court voluntary arrangement
between Radius and its creditors which the Creditors Committee
will actively support. It was agreed, however, that if it
becomes apparent that the recapitalization cannot be
accomplished by an out of court voluntary arrangement, a
petition for reorganization of Radius under Chapter 11 of the
United States Bankruptcy Code will be filed to consummate the
recapitalization plan. The following is a summary of the
procedure for the attempt to achieve the plan voluntarily and
filing the pre-packaged Chapter 11 if it becomes necessary.
a. A good faith attempt shall be made by all parties to
achieve the recapitalization of Radius, in the manner set forth
in the Term Sheet, without the necessity of filing a petition
for reorganization of Radius under Chapter 11 of the United
States Bankruptcy Code. To that end, the parties shall do the
following:
i.The Committee shall, within two (2)days following execution of
the Term Sheet by Radius and IBM Credit send out a bulletin
to the creditors of Radius indicating:
(i) that the Committee has met and conferred with Radius and IBM
Credit and agreed in principle that it believes that it would
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be in the best interests of all unsecured creditors to
compromise or convert their claims into stock of Radius upon the
terms set forth in the Term Sheet;
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(ii) that Radius will, subject to the registration of the
necessary stock, make an offer to the creditors to compromise or
convert their claims into stock of Radius upon the terms set
forth in the Term Sheet;
(iii) that the Committee recommends that the creditors
accept such offer from Radius when received;
(iv) that if the percentage of creditors specified in the
Term Sheet does not accept said offer, a petition for
reorganization of Radius under Chapter 11 of the United States
Bankruptcy Code, will be filed proposing a plan of
reorganization consistent with the Term Sheet; and
(v) that the creditors will be receiving an
informational package concerning Radius and a ballot to elect
how their claims will be treated.
b. In the event that it should become necessary because of:
i. the failure of Radius to deliver to counsel for the
Committee the items specified herein in paragraph C in a timely
manner;
ii. an inability to comply with federal or state securities
laws required to issue the preferred and common stock and
warrants provided for in the Term Sheet (including an
inability to have the registration statement become
effective on or before September 30, 1996, (the "Closing Date");
iii. an inability to obtain the necessary consents of
creditors as specified in the Term Sheet, especially in the
convenience class;
iv. the necessity of staying litigation against
Radius which would otherwise unreasonably interfere with
Radius' ability to continue to operate its business;
v. protection of Radius' Board of Directors, IBM Credit
or the Committee from claims related to their negotiations or
other dealings with one another;
vi. protection of Radius and its creditors from
materially adverse tax consequences from the conversion of debt
into stock, as provided for in the Term Sheet; or
vii. an inability, for any other reason, to carry out the
provisions of the Term Sheet without the filing of a petition for
reorganization of Radius under Chapter 11 of the United States
Bankruptcy Code, on or before the Closing Date;
Radius shall cause to be filed such a petition, in which Radius
shall propose a plan of reorganization which is consistent
- -
with the terms of the Term Sheet, other than those related to
registration of the preferred and common stock and warrants. IBM
Credit and the Committee shall support said Plan.
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c. To facilitate the ability to file such a petition:
i. Radius will prepare and deposit with counsel for the
Committee, within seven (7) days from the execution of the
Term Sheet, a duly executed petition for reorganization of
Radius under Chapter 11 of the United States Bankruptcy Code and
certified resolutions of Radius' Board of Directors authorizing
the filing of such petition and such other documents as are
required to file such a petition;
ii. Radius will prepare and deposit with counsel for the
Committee, within twenty one (21) days from the execution of the
Term Sheet, an informational document to be used in the
solicitation of consents from the creditors to the compromise or
conversion of their debt as specified in the Term Sheet,
including a prospectus which complies with the disclosure
requirements of the SEC for solicitation of such conversion in
a voluntary plan and a disclosure statement describing the
recapitalization plan specified in the Term Sheet,
complying with all requirements of the United States Bankruptcy
Code.
iii. Radius and the Committee, acting in concert, shall, within
five (5) days from delivery of the above described informational
document mail said informational document to the creditors of
Radius and solicit the consents of the creditors to the
compromise or conversion of their debt as specified in the
Term Sheet. Radius shall have a period of thirty (30) days
from the mailing of said informational document to obtain the
necessary consents.
iv. Radius will prepare and deposit with counsel for the
Committee, within forty five (45) days from the execution of the
Term Sheet, all necessary schedules to the petition, a plan of
reorganization consistent with the terms of the Term Sheet,
any consents of creditors and shareholders to the plan obtained
and such other documents as are required to file a
"pre-packaged" plan of reorganization.
v. Counsel for the Committee is hereby authorized, upon the
occurrence of one of the events specified in paragraph B
above, and upon two days notice to, and consultation with,
Radius and IBM Credit, to file said petition.
d. To facilitate the payment of the fees of counsel to the
Committee for their increased level of services related to
communicating with the creditors and soliciting their consent
to the recapitalization plan set forth in the Term Sheet,
Radius shall pay to said counsel, on an accelerated basis and
no less favorable basis as counsel to Radius, the amount
shown as owing on said statement. This is not intended,
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however, to effect a subordination of any of
IBM Credit's claims, liens or other rights.
If the above correctly reflects your agreement, please have
your respective clients execute a copy of this letter at the
place indicated and return it to us with the executed Term
Sheet. We will also obtain the signatures of the Creditors
Committee which will be binding on them not only as members of
the Committee but as individual creditors as well.
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[SIGNATURE]
Very truly yours,
L. Xxxxxx Xxxxxx
Agreed to:
RADIUS, INC. IBM CREDIT CORPORATION
by /s/ Xxxxxxx Xxxxxx by /s/ Xxxxxx Xxxxx
___________________________ ___________________________
Xxxxxxx Xxxxxx, President Xxxxxx Xxxxx
THE UNOFFICIAL CREDITORS COMMITTEE
OF RADIUS, INC.
MITSUBISHI ELECTRONICS AMERICA SCI SYSTEMS
by by
___________________________ ___________________
Xxxx Xxxxxxx, Co-Chairman Xxxxxxx Xxxxxxxxx, CoChairman
AVNET EMG
MANUFACTURERS' SERVICES LTD.
by
____________________________
by
___________________________
Xxxxxx X. Xxxxx
Xxxx Xxxxxx
- -
[SIGNATURE]
MITSUBISHI INTERNATIONAL
QUANTUM ELECTRONICS
by
____________________________
by
___________________________
Xxxxxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
TECH DATA CORP.
by
____________________________
Xxxxx Xxxxxx
