<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
RADIUS, INC.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- -------------------------------------------------------------------------------
(Title of Class of Securities)
750470 20 5
- -------------------------------------------------------------------------------
(CUSIP Number)
Norton S. Karno
16255 Ventura Boulevard, Penthouse Suite
Encino, CA 91436-2363
(818) 981-3400
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
December 2, 1997
- -------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
<TABLE>
<S> <C> <C>
1) Names of Reporting Persons or I.R.S. Identification Nos. of
Above Persons:
Norton S. Karno
2) Check the Appropriate Box if a Member of a Group
(a) [ ] (b) [X]
3) SEC Use Only
4) Source of Funds
OO
5) Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e): [ ]
6) Citizenship or Place of Organization
United States
Number of 7) Sole Voting Power
Shares Bene- 1,824,999 (Please refer to Item 5 for disclaimer of beneficial ownership.)
ficially 8) Shared Voting Power
Owned by -0-
Each Report- 9) Sole Dispositive Power
ing Person 1,824,999 (Please refer to Item 5 for disclaimer of beneficial ownership.)
With 10) Shared Dispositive Power
-0-
11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,824,999 (Please refer to Item 5 for disclaimer of
beneficial ownership.)
12) Check box if the Aggregate Amount in Row (11) Excludes
Certain Shares
[X]
13) Percent of Class Represented by Amount in Row (11)
3.28%
14) Type of Reporting Person
IN
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
1) Names of Reporting Persons or I.R.S. Identification Nos. of
Above Persons:
Stephanie Lynn Karno Adult Trust #2; Tax I.D. #95-6579973
2) Check the Appropriate Box if a Member of a Group
(a) [ ] (b) [X]
3) SEC Use Only
4) Source of Funds
OO
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e): [ ]
6) Citizenship or Place of Organization
United States
Number of 7) Sole Voting Power
Shares Bene- 608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
ficially 8) Shared Voting Power
Owned by -0-
Each Report- 9) Sole Dispositive Power
ing Person 608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
With 10) Shared Dispositive Power
-0-
11) Aggregate Amount Beneficially Owned by Each Reporting Person
608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
12) Check box if the Aggregate Amount in Row (11) Excludes Certain Shares
[X]
13) Percent of Class Represented by Amount in Row (11)
1.09%
14) Type of Reporting Person
OO
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C> <C>
1) Names of Reporting Persons or I.R.S. Identification Nos. of Above Persons:
Valerie Ann Karno Adult Trust #2; Tax I.D. #95-6618869.
2) Check the Appropriate Box if a Member of a Group
(a) [ ] (b) [X]
3) SEC Use Only
4) Source of Funds
OO
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e): [ ]
6) Citizenship or Place of Organization
United States
Number of 7) Sole Voting Power
Shares Bene- 608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
ficially 8) Shared Voting Power
Owned by -0-
Each Report- 9) Sole Dispositive Power
ing Person 608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
With 10) Shared Dispositive Power
-0-
11) Aggregate Amount Beneficially Owned by Each Reporting Person
608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
12) Check box if the Aggregate Amount in Row (11) Excludes Certain Shares
[X]
13) Percent of Class Represented by Amount in Row (11)
1.09%
14) Type of Reporting Person
OO
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C> <C>
1) Names of Reporting Persons or I.R.S. Identification Nos. of Above Persons:
Mitchell Perry Karno Adult Trust #2; Tax I.D. #95-6572540.
2) Check the Appropriate Box if a Member of a Group
(a) [ ] (b)[X]
3) SEC Use Only
4) Source of Funds
OO
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e): [ ]
6) Citizenship or Place of Organization
United States
Number of 7) Sole Voting Power
Shares Bene- 608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
ficially 8) Shared Voting Power
Owned by -0-
Each Report- 9) Sole Dispositive Power
ing Person 608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
With 10) Shared Dispositive Power
-0-
11) Aggregate Amount Beneficially Owned by Each Reporting Person
608,333 (Please refer to Item 5 for disclaimer of beneficial ownership.)
12) Check box if the Aggregate Amount in Row (11) Excludes Certain Shares
[X]
13) Percent of Class Represented by Amount in Row (11)
1.09%
14) Type of Reporting Person
OO
</TABLE>
5
<PAGE> 6
Item 1. Security and Issuer.
This Statement relates to the Common Stock, no par value (the
"Common Stock"), of Radius, Inc. (the "Company"), a
California corporation having its principal executive office
at 215 Moffett Park Drive, Sunnyvale, California 94089.
Item 2. Identity and Background.
(a) The persons filing this Statement are Norton S.
Karno, the Stephanie Lynn Karno Adult Trust #2, the
Valerie Ann Karno Adult Trust #2, and the Mitchell
Perry Karno Adult Trust #2 (together referred to
herein as the "Trusts"). The Trusts were formed in
California on December 31, 1969 for the benefit of
Mr. Karno's children. Each Trust purchased shares of
Common Stock on December 2, 1997. Mr. Karno is the
Trustee of each of the Trusts.
(b) The business address of Mr. Karno and the Trusts is
16255 Ventura Boulevard, Penthouse Suite, Encino, CA
91436-2363.
(c) The principal occupation of Mr. Karno is as an
attorney at law with Norton S. Karno, A Professional
Corporation (the "PC"), 16255 Ventura Boulevard,
Penthouse Suite, Encino, CA
(d) and (e) During the last five years, neither Mr. Karno nor
to the knowledge of Mr. Karno any member of any
group which might be deemed to exist as described in
Item 5 have been convicted in a criminal proceeding
(excluding traffic violations and similar
misdemeanors), nor has he been a party to any civil
proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he was
subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state
securities laws or finding any violation with
respect to those laws.
(f) United States
Item 3. Source and Amount of Funds or Other Consideration.
The source of the funds used by the Trusts in making the
purchases described in this Statement was an advance by Mr.
Karno from his personal funds on behalf of the Trusts.
6
<PAGE> 7
Item 4. Purpose of Transaction.
The purchase of the shares by the Trusts was for investment.
Although the Trusts may acquire additional shares of Common
Stock, the Trusts have no present plans or proposals which
would relate to or result in:
(a) An extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the
Company or any of its subsidiaries;
(b) A sale or transfer of a material amount of assets of
the Company or any of its subsidiaries;
(c) Any change in the present board of directors or
management of the Company, including any plans or
proposals to change the number or term of directors
or to fill any existing vacancies on the board;
(d) Any material change in the present capitalization or
dividend policy of the Company;
(e) Any other material change in the Company's business
or corporate structure;
(f) Changes in the issuer's charter, bylaws or
instruments corresponding thereto or other actions
which may impede the acquisition of control of the
Company by any person;
(g) Causing a class of securities of the Company to be
delisted from a national securities exchange or to
cease to be authorized to be quoted in an
inter-dealer quotation system of a registered
national securities association;
(h) A class of equity securities of the Company becoming
eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of
1934; or
(i) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
As of the date of this Statement, each of the Trusts
beneficially owns 608,333 shares of Company Common Stock
constituting approximately 1.09% of the outstanding shares as
of August 12, 1997, based on information provided in the
Company's 10-Q filed August 12, 1997. Mr. Karno, as Trustee
of the Trusts, may be deemed to be the beneficial owner of
all shares of Common Stock owned by the Trusts. In addition,
the Trusts may be deemed to be part of a "group," as
described below.
7
<PAGE> 8
Each of the Trusts purchased 600,000 shares of Common Stock
(the "Shares") pursuant to an option (the "Option") granted
by Mitsubishi Electronics America, Inc. ("Mitsubishi") to
Gerald D. Ellenburg or his assigns to purchase a total of
3,999,901 shares of Common Stock for a purchase price of $.45
per share. As part of the sale, Mitsubishi also assigned to
each of the Trusts a warrant to purchase 8,333 shares (the
"Warrant") of Common Stock. In addition to the 600,000 Shares
purchased by each of the Trusts and the Warrant assigned to
each of the Trusts pursuant to the Option, the following
persons purchased shares of Common Stock and, to the extent
indicated below, received an assignment of warrants to
purchase shares of Common Stock pursuant to the Option. All
of such persons, together with the Trusts, may be deemed to
constitute a "group" within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934 because all of their
acquisitions of shares of Common Stock were made pursuant to
the Option:
<TABLE>
<CAPTION>
Number of Number of Total
Shares Voting Warrants Beneficial Percentage
Name Acquired Status Acquired Ownership of Class
---- --------- ------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Gerald D. Ellenberg and 1,800,000 Shared 25,001 1,825,001 3.28%
Kristin M. Tomczak, as
joint tenants
Jurgen W. Epple 239,941 Sole 0 239,941 0.43%(1)
Michael D. Edwards 159,960 Sole 0 159,960 0.29%
</TABLE>
------------------
(1) Mr. Epple is also the beneficial owner of 40,000 shares
of Common Stock not purchased pursuant to the Option.
Accordingly, with the 239,941 shares of Common Stock
purchased pursuant to the Options, Mr. Epple is the
beneficial owner of 279,941 shares of Common Stock, or
0.50% of the class.
The Trusts disclaim beneficial ownership of any shares of
Common Stock beneficially owned by Mr. Ellenburg and Ms.
Tomczak and Messrs. Epple and Edwards, and the filing of this
Statement shall not be construed as an admission that the
Trusts are the beneficial owners of such shares.
Each of the Trusts also disclaim beneficial ownership of the
shares of Common Stock owned by the other Trusts.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The Retirement Plan and Trust of the PC (the "Plan") made a
loan in the principal amount of $1,022,400 to Gerald D.
Ellenburg and Kristin M. Tomczak, a portion of which was used
by Mr. Ellenburg and Ms. Tomczak to purchase 1,800,000 shares
of Common Stock pursuant to the Option. Mr. Ellenburg and Ms.
Tomczak pledged to the Plan as security for the repayment of
the loan the shares of
8
<PAGE> 9
Common Stock purchased by them pursuant to the Option and
their interest in shares of Common Stock pledged to them as
collateral for a loan to Messrs. Epple and Edwards.
The Trusts, along with Mr. Ellenburg and Ms. Tomczak
(collectively, the "Owners") entered into a Finder's Fee
Agreement with Messrs. Epple and Edwards (together, the
"Finders") pursuant to which the Owners agreed to pay the
Finders $64,800 related to the Owners' purchase of shares of
Common Stock pursuant to the Option.
Item 7. Material to be Filed as Exhibits.
The following documents are filed herewith as exhibits to
this Statement:
1. Joint Filing Agreement
2. Option to purchase Shares
3. Assignment of Warrant
4. Promissory Note secured by Mortgage, Stock Pledge
Agreements and Collateral Assignments
5. Stock Pledge Agreement
6. Finder's Fee Agreement
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: December 11, 1997
/s/ NORTON S. KARNO
------------------------------------------
Norton S. Karno
Stephanie Lynn Karno Adult Trust #2, by
/s/ NORTON S. KARNO, Trustee
------------------------------------------
Stephanie Lynn Karno Adult Trust #2, by
Norton S. Karno, Trustee
Valerie Ann Karno Adult Trust #2, by
/s/ NORTON S. KARNO, Trustee
------------------------------------------
Valerie Ann Karno Adult Trust #2, by
Norton S. Karno, Trustee
Mitchell Perry Karno Adult Trust #2, by
/s/ NORTON S. KARNO, Trustee
------------------------------------------
Mitchell Perry Karno Adult Trust #2, by
Norton S. Karno, Trustee
9
<PAGE> 10
EXHIBIT INDEX
<TABLE>
Exhibit Page
------- ----
<S> <C> <C>
1. Joint Filing Agreement ___
2. Option to purchase Shares ___
3. Assignment of Warrant ___
4. Promissory Note secured by Mortgage, Stock ___
Pledge Agreements and Collateral Assignments
5. Stock Pledge Agreement ___
6. Finder's Fee Agreement ___
</TABLE>
<PAGE> 1
EXHIBIT 1
JOINT FILING AGREEMENT
Pursuant to Rule 13d-1 (f) (1) under the Securities Exchange Act of
1934, the undersigned hereby agree that only one statement containing the
information required by Schedule 13D (or any amendment thereof) need be filed
on their behalf with respect to the beneficial ownership of any equity
securities of Radius, Inc. or any subsequent acquisitions or dispositions of
equity securities of Radius, Inc.
Date: December 11, 1997
/s/ Norton S. Karno
---------------------------------------
Norton S. Karno
/s/ Norton S. Karno
---------------------------------------
Norton S. Karno, Trustee of the
Stephanie Lynn Karno
Adult Trust #2
/s/ Norton S. Karno
---------------------------------------
Norton S. Karno, Trustee of the
Valerie Ann Karno
Adult Trust #2
/s/ Norton S. Karno
---------------------------------------
Norton S. Karno, Trustee of the
Mitchell Perry Karno
Adult Trust #2
<PAGE> 1
EXHIBIT 2
Mr. Kazuhiko Hayakawa
President
Information Technologies Group
Mitsubishi Electronics America, Inc.
November 6, 1997
Mitsubishi Electronics Corp. (hereinafter referred to as "Seller") hereby
agrees for the consideration of $100 paid to Seller in care of Mr. Jurgen Epple
to sell exclusively and solely to Gerald D. Ellenburg (hereinafter referred to
as "Buyer") and/or Buyer's assignees, all of Seller's shares of stock in
Radius, Inc. (Nasdaq trading symbol RDUS) for $0.45 per share. Such sale is to
be completed by 5:00 P.M. PST November 14, 1997 by delivery by Buyer of wired
funds or cashier's check (if wired, a confirmation of wire is acceptable to
Seller if received on the business day following November 14, 1997 if such
confirmation states that wire was funded by Buyer on November 14, 1997).
Seller represents that it owns and will sell to Buyer 3,999,901 (three million
nine hundred ninety-nine thousand nine hundred and one) shares pursuant to the
Registration Statement dated January 16, 1997, which shares will be
unrestricted and freely tradable upon transfer to Buyer as specified in the
governing agreement, free of lien or encumbrance. Seller agrees to sell and
transfer to Buyer, at sale, any and all rights and claims it has against
Radius, Inc. and any of its former or present directors, officers, agents, or
employees as a shareholder of Radius, Inc.
Buyer and Seller agree that a fax and countersigned copy of this agreement is
fully enforceable.
By: Mr. Kazuhiko Hayakawa By: Gerald D. Ellenburg
President
Information Technologies Group
Mitsubishi Electronics America, Inc.
/s/ Kazuhiko Hayakawa /s/ Gerald D. Ellenburg
------------------------------------ -----------------------
Gerald D. Ellenburg
<PAGE> 1
EXHIBIT 3
ASSIGNMENT OF WARRANT
FOR VALUE RECEIVED, the undersigned hereby assigns all of its rights, title and
interest under that certain warrant agreement dated October 13, 1996 entered
into with Radius, Inc. under which the undersigned obtained the right to
acquire up to 200,000 shares of its Common Stock. The undersigned hereby
confirms that, based on the amount of credit extended to and utilized by
Radius, Inc., such warrant is for the purchase of 50,000 of such shares. Such
warrant shall be assigned on the following basis:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- ----------------
<S> <C>
Gerald D. Ellenberg and
Kristin Mary Tomczak,
as joint tenants 25,001
Norton S. Karno, Trustee of
the Stephanie Lynn Karno
Adult Trust #2 8,333
Norton S. Karno, Trustee of
the Valerie Ann Karno
Adult Trust #2 8,333
Norton S. Karno, Trustee of
the Mitchell Perry Karno
Adult Trust #2 8,333
------
TOTAL SHARES 50,000
</TABLE>
Dated December 2, 1997 MITSUBISHI ELECTRONICS AMERICA, INC.
By: /s/ Katsuhiko Hayakawa
----------------------------
Katsuhiko Hayakawa
Group President
<PAGE> 1
EXHIBIT 4
PROMISSORY NOTE SECURED BY MORTGAGE,
STOCK PLEDGE AGREEMENTS, AND COLLATERAL ASSIGNMENTS
$1,022,400 Clearwater, Florida November 28, 1997
FOR VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, GERALD D. ELLENBURG and KRISTIN MARY TOMCZAK
(collectively, "Makers"), jointly and severally promise to pay to NORTON S.
KARNO, TRUSTEE OF NORTON S. KARNO, A PROFESSIONAL CORPORATION, AMENDED AND
RESTATED EMPLOYEES' RETIREMENT PLAN AND TRUST ("Payee"), or order, at 16255
Ventura Boulevard, Suite 1200, Encino, California 91436, or at such other
address as Payee may, from time to time, designate, the sum of One Million,
Twenty-Two Thousand, Four Hundred Dollars ($1,022,400) with interest on the
unpaid balance outstanding from time to time, subject to the provisions of
Paragraph 2, at the rate described below.
1. Definitions.
a. Funding Date. The "Funding Date" shall be December
1, 1997.
b. Maturity Date. The "Maturity Date" shall be November
30, 2000.
c. Payee. As used herein, the term "Payee" shall
include the herein named Payee and all of said Payee's heirs, successors and
assigns and shall mean the person(s) and/or entity(ies) holding the Payee's
interest in this Note at any time.
2. Interest Rate. Commencing with the Funding Date and
continuing until fully paid, the unpaid principal balance of this Note shall
bear interest at the rate of twelve percent (12%) per annum. Interest not paid
when due shall be added to principal on its due date, without notice to Makers,
and without any grace period, and shall thereafter bear interest.
3. Payments.
a. Monthly Interest Payments. Payments of interest then
accrued shall be due on the first day of each month commencing January 1, 1998.
Any such installment of interest not paid when due shall be added to principal
and thereupon bear interest.
b. Proceeds of Sale of Radius Stock. Upon Makers' sale
or transfer of all or any portion of their stock in Radius, Inc., a California
corporation, or any interest therein, or any rights thereto, including but not
limited to any proceeds of any sale of any call option with respect thereto
(collectively, a "Sale"), Makers shall cause the entire net proceeds of such
Sale (up to the total amount of then accrued but unpaid interest and principal
owed upon this Note) to be paid to Payee and Payee shall apply same, upon
receipt, (i) first to any cost or expense incurred by Payee in collecting same
from Makers (including but not limited to any attorneys fees or other costs
incurred in enforcing Payee's rights hereunder, (ii) then to past-due, accrued
1
<PAGE> 2
but unpaid interest, (iii) then to the interest accrued but unpaid since the
last regularly scheduled payment date pursuant to Paragraph 2 above, and (iv)
then to principal. As used herein, the "net proceeds" of a Sale means all
proceeds of such Sale reduced only by all direct selling expenses incurred and
paid, at the time of the closing of such Sale, to persons or entities not
related to, or affiliated with, Makers or either of them, directly or
indirectly, including but not limited to brokerage commissions and registration
expenses.
c. Final Principal Payment. On the Maturity Date,
Makers shall pay Payee the entire unpaid principal balance hereof, together
with all then accrued but unpaid interest thereon.
4. Prepayment. Makers may prepay the indebtedness evidenced
hereby, in whole or in part, at any time.
5. Security. This Note is secured by:
a. a first priority Stock Pledge Agreement executed by
Makers pledging all of their stock of Radius, Inc. (referred to herein as the
"Radius Stock Pledge Agreement");
b. a Stock Pledge Agreement executed by Makers pledging
all of their stock of Digital Lightwave, Inc., a Delaware corporation (referred
to herein as the "Digital Stock Pledge Agreement");
c. a fourth priority Mortgage encumbering Makers' real
property commonly known as 16 Ambleside Drive, Belleair, Florida 34616
(referred to herein as the "Mortgage");
d. a first priority Collateral Assignment of Note and
Stock Pledge (the "Epple/Edwards Collateral Assignment") executed by Makers
pledging that certain Promissory Note made by Jurgen Epple and Michael Edwards
as makers to Gerald D. Ellenburg and Kristin Mary Tomczak as payee in the
original principal amount of One Hundred Eighty Thousand Dollars ($180,000)
(the "Epple/Edwards Note") and the Stock Pledge Agreement made by Jurgen Epple
and Michael Edwards as pledgors to Gerald D. Ellenburg and Kristin Mary Tomczak
as pledgee pledging all of said pledgors' stock of Radius, Inc. as security
for the Epple/Edwards Note (referred to herein as the "Epple/Edwards Stock
Pledge Agreement"); and
e. a Collateral Assignment of General Partner interests
executed by Makers pledging all of the interests of Gerald D. Ellenburg as a
General Partner in those partnerships described on Exhibit A attached hereto
and incorporated herein by reference (referred to herein as the "Partnership
Collateral Assignment" and collectively referred to with the Radius Stock
Pledge Agreement, the Digital Stock Pledge Agreement, the Mortgage, and the
Epple/Edwards Collateral Assignment as the "Security Instruments").
As additional consideration to Payee to make the loan evidenced hereby,
Makers are, concurrently herewith, granting Payee and Payee's affiliates,
additional security interests in Makers' Radius, Inc. stock pursuant to
additional Stock Pledge Agreements junior in priority to the Radius Stock Pledge
Agreement being made as a part of the security for the loan evidenced
2
<PAGE> 3
hereby. As set forth in such other Stock Pledge Agreements, Makers shall
employ any of their net proceeds of any Sale of their Radius, Inc. stock
remaining after this Note has been fully repaid to discharge the other
indebtedness and obligations then secured by such other Stock Pledge Agreements.
6. Events of Default and Remedies.
a. Any one of the following occurrences shall constitute an "Event of
Default" under this Note:
i. Makers' failure to pay any installment of interest,
principal or interest and principal on the date due of such payment;
ii. Makers' breach of any of their other covenants and
agreements hereunder; or
iii. The occurrence of any Event of Default or material breach
under any of the Security Instruments.
b. Upon the occurrence of any Event of Default under this Note:
i. The entire unpaid principal balance, any accrued but
unpaid interest and all other amounts owing under this Note and all
other sums owing under the Security Instruments shall, at the option
of Payee of this Note and without notice or demand of any kind to
Makers or any other person, immediately become due and payable; and
ii. Payee shall have and may exercise any and all rights and
remedies available at law or in equity and also any and all rights and
remedies provided in the Security Instruments.
The remedies of Payee, as provided in this Note and in the Security
Instruments, shall be cumulative and concurrent and may be exercised singularly,
successively or together, at the sole discretion of Payee, and may be exercised
as often as occasion therefor shall arise. No act or omission or commission of
Payee, including specifically any failure to exercise any right, remedy or
recourse, shall be deemed to be a waiver or release of any right, remedy or
recourse, such waiver or release to be effected only through a written document
executed by Payee. A waiver or release with reference to any one event shall not
be construed as continuing, as a bar to, or as a waiver or release of, any
subsequent right, remedy or recourse as to a subsequent event.
7. Legal Limits. All agreements between Makers and Payee are hereby
expressly limited so that in no event whatsoever, whether by reason of deferment
in accordance with this Note or under any agreement or by virtue of acceleration
or maturity of the indebtedness evidenced hereby, or otherwise, shall the amount
paid or agreed to be paid to the Payee hereof, for the loan, use, forbearance,
or detention of the money to be loaned under this Note or to
3
<PAGE> 4
compensate Payee for damages to be suffered by reason of a late payment or
default under this Note exceed the maximum permissible under applicable law.
If, for any circumstances whatsoever, fulfillment of any provisions of this
Note or any provision in the Stock Pledge Agreement at the time the performance
of such provision shall be due, shall involve exceeding the limit of validity
prescribed by law, ipso facto, the obligations to be fulfilled shall be reduced
to the limit of such validity. This provision shall never be superseded or
waived and shall control every other provision of all agreements among Makers
and Payee.
8. Loan Costs. Makers covenant and agree to pay Karno, Schwartz,
Friedman, Shafron & Warren all of the legal fees and costs incurred by Payee in
negotiating, documenting and in closing the loan evidenced by this Note and all
of the Security Instruments and all documents related thereto, including but
not limited to the letter describing and waiving conflicts of interest and the
acquisition of adverse interests.
9. Attorneys' Fees. Should an Event of Default occur under this
Note, Makers agree to pay a reasonable sum to Payee for attorneys' fees
incurred in collecting the sums due hereunder and enforcing the rights and
remedies of Payee under this Note and under the Security Agreement. If any
action is brought to enforce or interpret the provisions of this Note, the
prevailing party shall be entitled to a reasonable sum for attorneys' fees.
10. Governing Law and Severability. This Note and the Security
Agreement are made pursuant to and shall be construed and governed by the laws
of the State of Florida (which is the state in which Makers maintain their
principal residence) and all rules and regulations promulgated thereunder. If
any provision of this Note or of the Security Agreement is construed or
interpreted by a court of competent jurisdiction to be void, invalid or
unenforceable, such decision shall affect only those provisions so construed or
interpreted and shall not affect the remaining provisions of this Note or of
the Security Agreement.
11. Time of Essence. Time is of the essence of this Note.
12. Payment Without Offset. Principal and interest shall be paid
without deduction or offset in lawful money of the United States of America.
13. Notices. Any notice, report or writing required or permitted
to be given hereunder shall be in writing and shall be served by delivering the
same personally either to the other party, or by depositing the notice,
contained in a sealed envelope, postage prepaid, in any mailbox maintained by
the United States Postal System for the purpose of depositing mail into said
System, as registered or certified mail, with return receipt requested or by
Express Mail, certified with return receipt requested. Any and all such
notices shall be delivered to the parties at their respective addresses
specified in this paragraph. Any such notice deposited in the mail shall be
conclusively deemed delivered to and received by the addressee three (3)
business days after the deposit in the mail as first class mail, or one (1)
business day after deposit in the mail as Express Mail, if all of the foregoing
conditions of notice shall have been satisfied and if such notice shall at the
time of mailing have been contained in an envelope addressed as follows:
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<PAGE> 5
To Payee: Norton S. Karno, Trustee
16255 Ventura Boulevard, Suite 1200
Encino, California 91436
To Makers: Gerald D. Ellenburg and Kristin Mary Tomczak
1520 Gulf Boulevard, Suite 1406
Clearwater, Florida 33767
Any party hereto may change its address for the purposes of this paragraph by
giving such other party notice, as provided for herein, of the new address.
14. Assignment. Payee may assign all or any portion of their
rights, title or interest in this Note to any person, firm, corporation,
partnership or other entity without the consent of Makers.
15. Waiver. Makers, each for himself, herself and his or her
successors, transferees and assigns and all guarantors, endorsers and signers,
hereby waive all valuation and appraisement privilege, presentment and demand
for payment, protest, notice of protest and nonpayment, dishonor and notice of
dishonor, bringing of suit, lack of diligence or delays in collection or
enforcement of this Note and notice of the intention to accelerate, the release
of any party liable and the release of any security for the debt, the taking of
any additional security and any other indulgence or forbearance. Makers and
their guarantors, successors, transferees and assigns shall be jointly and
severally, directly and primarily liable for the amount of all sums owing and
to be owed hereon, and each agrees that this Note and any and all payments
coming due hereunder may be extended or renewed from time to time without in
any way affecting or diminishing his liability under this Note.
16. Headings. The subject headings or titles of paragraphs of
this Note are included for purposes of convenience and reference only and shall
not affect the construction or interpretation of any of its provisions.
17. Waiver of Jury Trial. MAKERS HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN RESPECT TO ANY LITIGATION
BASED UPON THIS NOTE AND ANY OTHER AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH, OR ANY COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF MAKERS OR PAYEE.
5
<PAGE> 6
18. Entire Agreement. This Note sets forth the entire agreement
of the Makers with respect to the subject matter hereof and may be modified or
amended only by a written instrument executed by Makers and Payee.
MAKERS:
/s/ Gerald D. Ellenburg
-------------------------------------
Gerald D. Ellenburg
/s/ Kristin M. Tomczak
-------------------------------------
Kristin M. Tomczak
6
<PAGE> 1
EXHIBIT 5
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT is made effective the 28th day of
November, 1997 (the "Effective Date") by GERALD D. ELLENBERG and KRISTIN MARY
TOMCZAK as "Pledgors," KARNO, SCHWARTZ, FRIEDMAN, SHAFRON & WARREN, A
Partnership Including Professional Corporations as "Pledge Holder," and NORTON
S. KARNO, TRUSTEE OF THE NORTON S. KARNO, A PROFESSIONAL CORPORATION, AMENDED
AND RESTATED EMPLOYEES' RETIREMENT PLAN AND TRUST as "Pledgee".
1. PLEDGE. Pledgors hereby deposit with Pledge Holder and do
hereby, as of the Effective Date, pledge to Pledgee, as collateral security for
the payment in full, faithful, true and exact performance and observance of all
of the covenants and conditions of Pledgors as Makers of that certain
Promissory Note of even date herewith in the original principal amount of
$1,022,400, including but not limited to the payment, in full, of all such
indebtedness and any interest thereon, and other sums payable to Pledgee upon
or with respect to such indebtedness (collectively, the "Obligations"),
Pledgors' property (the "Collateral") described as
All of Pledgors' shares of and warrants to purchase shares of
the common stock of Radius, Inc., a California corporation
("Radius"), whether held in the name of either of Pledgors or
held in the name of any other person or entity for the
benefit of Pledgors, or either of them, including but not
limited to any and all shares of and warrants to purchase
shares of Radius common stock acquired by Pledgors or any
other person or entity for the benefit of Pledgors, or either
of them at any time and from time to time after the date
hereof.
2. PRIORITY OF PLEDGE. The within pledge is, or will be upon the
acquisition of such shares and warrants by Pledgors, a first priority lien on
such shares and warrants.
3. POWER OF SALE ON DEFAULT. Pledgors hereby authorize and
empower Pledgee, upon any default of any one or more of the Pledgors in the
prompt payment or due performance of any of the Obligations, at its option and
without notice to Pledgors, except as specifically herein provided, to collect,
sell, assign and deliver, the whole or any part of the Collateral, and to
execute, on Pledgors' behalf all documents required in connection therewith,
including but not limited to any Assignment Separate From Certificate, or any
substitute therefor, or any addition thereto, at public or private sale, for
cash, upon credit, or for future delivery, without the necessity of the
Collateral being present at any such sale, or in view of prospective purchasers
thereof, and without any presentment, demand for performance, protest, notice
of protest, or notice of dishonor, or advertisement, any such demand or
advertisement being expressly waived. Pledgees shall give Pledgors, and each of
them, and the Pledge Holder, ten (10) days' notice by United States mail,
postage prepaid, at the addresses specified herein, of the time and place of
any public or private sale. Upon such sale, Pledgees may become the
<PAGE> 2
purchaser of the whole or any part of the Collateral sold, discharged from all
claims and free from any right of redemption. The foregoing is hereby made
subject to the following provisions, to wit: That Pledgees shall include in
such notice of the time and place of such sale a statement of the grounds upon
which default(s) is (are) based; and, that during such ten-day period,
Pledgors, or any one or more of them, may cure such default, in which event
said sale shall not be held and it shall be deemed that no such default
occurred.
4. APPLICATION OF PROCEEDS. In case of any sale, transfer or
disposal of the Collateral, whether pursuant to a sale by Pledgees under
Paragraph 3 above, or any sale of all or any portion of Pledgors' interest in
the Collateral (including but not limited to the sale of any call option with
respect to the Collateral), Pledgors covenant and agree that the proceeds
thereof shall first be applied to the payment of the expenses of such sale,
commissions, attorneys' fees and all charges paid or incurred by Pledge Holder
hereunder; second, to the payment of the expenses of such sale, commissions,
attorneys' fees and all charges paid or incurred by Pledgees pertaining to
sale, including any taxes or other charges imposed by law upon the Collateral
and/or the owning, holding or transferring thereof; third, to the payment of
the expenses of such sale, commissions, attorneys' fees and all charges paid or
incurred by Pledgors pertaining to said sale but exclusive of any taxes or
other charges imposed by law upon the owning, holding or transferring of the
Collateral; fourth, to pay, satisfy and discharge the Note (and any other
indebtedness of Pledgors under any of the instruments securing the Note);
fifth, to pay, satisfy and discharge the duties and obligations of Pledgors
pursuant to the Stock Pledge Agreement, and the respective indebtedness secured
thereby, in the order of their respective priority; and sixth, to pay the
surplus, if any, to Pledgors.
5. ADDITIONAL RIGHTS OF PLEDGEES. Pledgee specifically and
expressly reserve the right and remedy to disregard the security hereof, and to
sue on the principal obligation secured hereby, and expressly declare that its
remedies upon this Stock Pledge Agreement, to cause the sale of the Collateral
at public or private sale in the manner as hereinabove set forth, or to bring
an action of foreclosure and have the Collateral sold at judicial sale, are
cumulative, and in addition to all other remedies that he may possess under the
Uniform Commercial Code. Pledgee shall have the right to recover, as a part of
any judgment in an action of foreclosure, commissions, attorneys' fees, and all
charges and expenses paid or incurred by him in connection with any such
foreclosure sale. Pledgee reserves the right to recover any deficiency judgment
arising from such sale or sales, whether judicial or by way of pledge sale.
However, Pledgee shall not be entitled to recover attorneys' fees and costs if
any default is cured within the ten-day notice period described in Paragraph 3
above.
6. ADDITIONS TO COLLATERAL. Any stock rights, and rights to
subscribe, cash dividends, liquidating dividends, stock dividends, dividends
paid in stock, new securities, or other property, which Pledgors may hereafter
become entitled to receive on account of the Collateral, shall be and become a
part of the Collateral, and in the event that Pledgors shall receive any such,
they represent, warrant, covenant and agree that they will immediately deliver
it to the Pledge Holder to be held by it in the same manner as the Collateral
originally pledged hereunder.
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<PAGE> 3
7. INDEMNITY. In case of any adverse claims in respect to the
Collateral or any portions thereof, arising out of any act done or suffered by
Pledgors, the Pledgors promise and agree to hold harmless and to indemnify
Pledge Holder and Pledgee from and against any losses, liabilities, damages,
expenses, costs and reasonable attorneys' fees incurred in or about defending,
protecting, or prosecuting the security interests hereby created.
8. ADVANCES TO PROTECT COLLATERAL. Pledgors agree to pay, prior
to delinquency, all taxes, liens and assessments against the Collateral, and
upon their failure to do so, Pledgee, at his option, may pay any of them, and
shall be the sole judge of the legality or validity thereof and the amount
necessary to discharge same, and Pledgors' failure to pay same shall be a
default hereunder and the sums so advanced shall be due and payable to Pledgees
together with interest thereon at the rate of twelve percent (12%) per annum
until fully repaid.
9. NON-WAIVER. Any forbearance or failure or delay by Pledgee in
exercising any right, power or remedy hereunder shall not be deemed to be a
waiver of such right, power or remedy, and any single or partial exercise of
any right, power or remedy of Pledgee shall continue in full force and effect
until such right, power or remedy is specifically waived by an instrument in
writing, executed by Pledgee.
10. RELEASE OF COLLATERAL. When the Note shall have been fully
performed and satisfied and Pledgee shall have received payment in full of the
Note and all other sums due under the instruments securing the Note, then, and
only then, this Stock Pledge Agreement shall be canceled and of no further
force and effect, and Pledge Holder shall thereupon deliver to the respective
Pledgors the Collateral free and clear of the lien of this pledge.
11. VOTING RIGHTS. During the term of this Stock Pledge Agreement
and so long as the Pledgors, and each of them, are not in default under the
Obligations, the respective Pledgors shall have the right to vote any shares of
stock pledged hereby on all corporate questions. The foregoing notwithstanding,
Pledgors agree not to vote their shares of Radius stock, in any manner which
would result in a liquidation, dissolution or merger of Radius until such time
as the Obligations are wholly satisfied.
12. SUCCESSOR PLEDGE HOLDER-LIMITATION ON LIABILITY. In the event
that the Pledge Holder becomes incapacitated due to dissolution or disability
so that it is no longer able to act as Pledge Holder, Kenneth L. Friedman, A
Professional Corporation, shall thereupon be the Successor Pledge Holder.
Pledgors hereby acknowledge that the Pledge Holder and the Successor Pledge
Holder are affiliated with one another and with Pledgee and after consulting
with independent legal counsel or, having had the opportunity to do so, having
elected not to so consult such counsel, hereby waive all conflicts of interest
arising out of Pledge Holder's and/or the Successor Pledge Holder's performance
of its obligations hereunder. Pledge Holders shall only be liable to Pledgors
for its acts of gross negligence or willful misconduct.
13. PLEDGORS' REPRESENTATION AND WARRANTIES. Pledgors each
represent and warrant that (i) Pledgors now own the Collateral, (ii) Pledgors
have not heretofore
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<PAGE> 4
sold, transferred, conveyed, hypothecated or otherwise assigned any of their
interest in the Collateral to any other person or entity, (iii) unless and
until the Obligations have been fully discharged, each of them will not (a)
issue any replacement stock certificate with respect to the Collateral, or (b)
make any further assignment or pledge of the Collateral, all without Pledgees'
prior written consent.
14. CONSTRUCTION. This Agreement, and all of the rights and
duties in connection therewith, shall be governed by the laws of the State of
Florida, the state in which the loan evidenced by the Note was made, and the
state in which Pledgors maintain their principal residences.
15. NOTICE. Any notice, report or writing required or permitted
to be given hereunder shall be in writing and shall be served by delivering the
same personally either to the other party, or to the agents, officers or other
representatives thereof hereinbelow designated, if any, or by depositing the
notice, contained in a sealed envelope, postage prepaid, in the United States
Postal System as registered or certified mail, with return receipt requested or
as Express Mail. Any and all such notices shall be delivered to the parties at
their respective addresses specified in this paragraph. Any such notice
deposited in the mail shall be conclusively deemed delivered to and received by
the addressee two (2) business days after the deposit in the mail as registered
or certified mail, return receipt requested, or one (1) business day after
deposit in the mail as Express Mail if all of the foregoing conditions of
notice shall have been satisfied and if such notice shall at the time of
mailing have been contained in an envelope addressed as follows:
To Pledgors: Gerald D. Ellenberg and Kristin Mary Tomczak
1520 Gulf Boulevard, Suite 1406
Clearwater, Florida 33767
To Pledgee: Norton S. Karno, Trustee
16255 Venture Boulevard, Suite 1200
Encino, California 91436
To Pledge Holder: Karno, Schwartz, Friedman, Shafron & Warren
16255 Ventura Boulevard, Suite 1200
Encino, California 91436
Attention: Kenneth L. Friedman
Any party hereto may change its address for the purposes of this paragraph by
giving such other party notice, as provided for herein, of the new address.
16. COUNTERPARTS. This Stock Pledge Agreement may be executed in
counterparts; each thereof is hereby declared to be an original; all, however,
shall constitute but one and the same agreement.
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<PAGE> 5
17. HEIRS AND SUCCESSORS. This Stock Pledge Agreement and all of
its terms and provisions shall be binding upon the heirs, successors,
transferees and assigns of each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Pledge
Agreement effective the date first hereinabove set forth.
PLEDGORS:
/s/ Gerald D. Ellenburg
-------------------------------------------
GERALD D. ELLENBURG
/s/ Kristin Mary Tomczak
-------------------------------------------
KRISTIN MARY TOMCZAK
PLEDGEE: /s/ Norton S. Karno
-------------------------------------------
NORTON S. KARNO, TRUSTEE OF THE
NORTON S. KARNO, A PROFESSIONAL
CORPORATION, AMENDED AND RESTATED
EMPLOYEES' RETIREMENT PLAN AND
TRUST
PLEDGE HOLDER:
KARNO, SCHWARTZ, FRIEDMAN,
SHAFRON & WARREN, A Partnership
Including Professional Corporations
By: KENNETH L. FRIEDMAN, A
Professional Corporation,
General Partner
By: /s/ Kenneth L. Friedman
-------------------------------
KENNETH L. FRIEDMAN,
President
5
<PAGE> 1
EXHIBIT 6
FINDER'S FEE AGREEMENT
THIS FINDER'S FEE AGREEMENT (this "Agreement") is entered into between
NORTON S. KARNO, TRUSTEE OF THE STEPHANIE LYNN KARNO ADULT TRUST #2, VALERIE
ANN KARNO ADULT TRUST #2 AND MITCHELL PERRY KARNO ADULT TRUST #2 (collectively
the "Karno Trusts"), GERALD D. ELLENBURG AND KRISTIN MARY TOMCZAK
(collectively, "Ellenburg" and together with the Karno Trusts, the "Owners")
AND JURGEN EPPLE AND MICHAEL EDWARDS (collectively, "Finders") as follows:
1. Finders introduced Owners to Radius, Inc., a NASDAQ traded company
("Radius") and Owners acquired an option to purchase 3,600,000 (Owners' net
share of 3,999,901 shares) shares of Radius and a Warrant for 50,000 shares of
Radius (the "Warrant").
2. Owners exercised said option and purchased said Radius shares and
acquired the Warrant on December 2, 1997.
3. Owners agree to pay Finders a Finder's Fee of $64,800 in accordance
with EXHIBIT A attached hereto concurrently with the execution of this
Agreement. This Fee fully compensates Finders for any and all services
provided to Owners in relation to Owners' purchase of said Radius shares and
the Warrant.
4. Owners agree to pay as an additional Finder's Fee, on December 2 of
each year, commencing December 2, 1998, and continuing only so long as both
owners and Finders continue to own their respective Radius shares, an annual
Fee of 1% of the December 2 value in said respective year of however many
Radius shares Owners own of said 3,600,000 shares. Said Fee is herein pledged
to pay any interest that is concurrently due to Owners or any of them on loans
owed by Finders to Owners.
5. This Agreement will be governed by the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
this 2nd day of December, 1997.
[SIGNATURES FOLLOW ON NEXT PAGE]
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<PAGE> 2
OWNERS:
/s/ Norton S. Karno
-----------------------------------------
Norton S. Karno, Trustee of Stephanie
Lynn Karno Adult Trust #2
/s/ Norton S. Karno
-----------------------------------------
Norton S. Karno, Trustee of Valerie
Ann Karno Adult Trust #2
/s/ Norton S. Karno
-----------------------------------------
Norton S. Karno, Trustee of Mitchell
Perry Karno Adult Trust #2
/s/ Gerald D. Ellenburg
-----------------------------------------
Gerald D. Ellenburg
/s/ Kristin Mary Tomczak
-----------------------------------------
Kristin Mary Tomczak
FINDERS:
/s/ Jurgen Epple
-----------------------------------------
Jurgen Epple
/s/ Michael Edwards
-----------------------------------------
Michael Edwards
2
<PAGE> 3
EXHIBIT A
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Owner Paying Jurgen Epple Michael Edwards Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stephanie Lynn Karno Adult Trust #2 $ 6,480 $ 4,320 $ 10,800
- ---------------------------------------------------------------------------------------------------------------------
Valerie Ann Karno Adult Trust #2 6,480 4,320 10,800
- ---------------------------------------------------------------------------------------------------------------------
Mitchell Perry Karno Adult Trust #2 6,480 4,320 10,800
- ---------------------------------------------------------------------------------------------------------------------
Subtotal-Karno Trusts 19,440 12,960 32,400
- ---------------------------------------------------------------------------------------------------------------------
Gerald D. Ellenburg and Kristin Mary Tomczak 19,440 12,960 32,400
- ---------------------------------------------------------------------------------------------------------------------
Total $ 38,880 $ 25,920 $ 64,800
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
3
