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 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;
(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, however, to effect a subordination of any of
IBM Credit's claims, liens or other rights.
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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.
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
MITSUBISHI INTERNATIONAL
QUANTUM ELECTRONICS
by
by
Xxxxxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
TECH DATA CORP.
by
Xxxxx Xxxxxx
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