EXHIBIT 5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of __________, 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:
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.
(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 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
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:
(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 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;
(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 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;
(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 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 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 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 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.
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.,
000 Xxxxxxx Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, 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 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.
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:
Name:
Title:
INITIAL INVESTOR:
Name: SCI SYSTEMS, INC.
By:
Name:
Title:
Permanent Address:
Taxpayer Identification Number (required by transfer agent):
