EXHIBIT 4
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 000 Xxxxxxx Xxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and IBM Credit
Corporation with a place of business at 0000 Xxxxxxxxx Xxxxxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer has entered into an Amended and Restated
Working Capital Financing and Term Loan Agreement dated August
30, 1996 with the Company (the "Loan Agreement");
WHEREAS, the Company, has secured the agreement of its unsecured
creditors with claims against the Company of approximately $45
million to 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, pursuant to the Loan Agreement, Buyer has agreed to
convert $3 million of secured indebtedness owed to it by the
Company into shares of the Company's Series A Convertible
Preferred Stock (the "Preferred Stock");
WHEREAS, in consideration of entering into the Loan Agreement,
the Company also has agreed to issue warrants ("Warrants") to
purchase 600,000 shares of Common Stock to Buyer;
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 750,000
shares of Preferred Stock and Warrants to purchase 600,000 shares
of Common Stock in consideration of the release of $3 million
indebtedness to Buyer (the "Obligation")as well as the entering
into of the Loan Agreement;
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.
The Buyer hereby subscribes for and agrees to purchase 750,000
shares of Preferred Stock (the "Shares") and Warrants to purchase
600,000 shares of Common Stock in full satisfaction of the
Obligation and in consideration of entering into the Loan
Agreement.
- -
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 and Warrants for its own
account for investment only and not with a view towards the
public sale or distribution thereof;
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, the Warrants
or the shares of Common Stock issuable upon exercise of the
Warrants (the "Warrant 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 and the Warrants 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 and the Warrants;
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 and the Warrants 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 Confidential
Private Placement Memorandum dated August 9, 1996 relating to the
offering of the shares of Common Stock to be issued to the
Company's unsecured creditors (the "Memorandum") and the exhibits
to the Memorandum. The Buyer understands that its investment in
the Shares and Warrants 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 or
Warrants; and
- -
g. This Agreement 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 and the shares of Common
Stock issuable upon conversion of the Shares (the "Conversion
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 and Conversion Shares.
b. Concerning the Warrants and the Warrant Shares. The
Warrants, when issued, delivered and paid for in accordance with
this Agreement, will be duly and validly authorized and issued
and will constitute 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. The Warrant Shares,
when issued, delivered and paid for in accordance with the terms
of the Warrants, 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 Warrant Shares.
c. 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.
d. Non-contravention. The execution and delivery of this
Agreement by the Company and the consummation by the Company of
the issuance of the Shares, the Conversion Shares, the Warrants
and the Warrant 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.
- -
e. 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 for the issuance and sale of the
Shares, the Conversion Shares, the Warrants and the Warrant
Shares as contemplated by this Agreement.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
- -
a. Transfer Restrictions. The Buyer acknowledges that (1) the
securities 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 securities may be sold or
transferred pursuant to exemptions from such registration and
qualification; (2) any sale of such securities 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 securities 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 securities 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 securities sold hereby 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 this Agreement, or after
such securities 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 such securities may bear a restrictive legend in
substantially the following form (and a stop-transfer order may
be placed against transfer of the certificates for such
securities):
The securities 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, assignment 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 Buyer on or before the Closing Date.
d. Form D. The Company agrees to file a Form D with respect to
the securities sold hereby as required under Regulation D.
e. Reporting Status. So long as the Buyer beneficially owns
any of the securities sold hereby 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
(and any Conversion Shares or Warrant Shares which may be issued
in the future), 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, the Conversion Shares and the
Warrant Shares and that the Shares, the Conversion Shares and the
Warrant 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, the
Conversion Shares and the Warrant 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,
the Conversion Shares and the Warrant 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
securities and promptly instruct the Company's transfer 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 and the
Warrants (the "Closing Date") shall be 12:00 noon, California
time, on the date which the Company has satisfied to the
conditions to closing set forth in the Loan Agreement. The
closing shall occur on the Closing Date at the offices of the
Company and is expected to occur on September 13, 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.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
- -
The Buyer understands that the Company's obligation to sell the
Shares and the Warrants 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 and Warrants 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 and the Warrants is conditioned upon:
a. Delivery by the Company of one or more certificates for the
Shares in accordance with this Agreement;
b. Delivery by the Company of one or more agreements
representing the Warrants promptly after the determination of the
exercise price of the Warrants. The exercise price of the
Warrants shall be average of the last sales price of the Common
Stock on the Nasdaq SmallCap Market (or other similar quotation
system) for the five trading days prior to and the five trading
days subsequent to, the Closing Date. In no event shall the
exercise price of the Warrants be more than $1.00 per share.
c. 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
d. 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. In the event of any inconsistency between any
provision of this Agreement and the Loan Agreement, the
provisions of the Loan Agreement shall govern. 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
- -
[SIGNATURE]
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.
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.
IBM CREDIT CORPORATION
By: /s/ Xxxxxx X. Xxxxx
Title: Director Remarketer Financing Portfolio Controls
Date: September 13, 1996
RADIUS INC.
By: /s/ Xxxxxxx X. Xxxxxx
Title: Chairman and CEO
Date: September 13, 1996
