<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)
Jurgen W. Epple
423 Cleveland Street
Clearwater, FL 33757
(813) 449-9307
- -------------------------------------------------------------------------------
(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>
1) Names of Reporting Persons or I.R.S. Identification Nos. of Above
Persons:
Jurgen W. Epple
2) Check the Appropriate Box if a Member of a Group
(a) [ ] (b) [X]
3) SEC Use Only
4) Source of Funds
00
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e): [ ]
6) Citizenship or Place of Organization
Germany
Number of 7) Sole Voting Power
Shares Bene- 279,941 (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 279,941 (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
279,941 (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)
0.50%
14) Type of Reporting Person
IN
</TABLE>
2
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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 person filing this Statement is Jurgen W. Epple.
(b) His business address is 423 Cleveland Street, Clearwater, FL
33757.
(c) The present principal occupation and employment of Mr. Epple is
self-employed as an investor.
(d) and (e) During the last five years, neither Mr. Epple nor to Mr.
Epple's knowledge 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) Germany.
Item 3. Source and Amount of Funds or Other Consideration.
The source of the funds used in making the purchase described in this
statement was a loan in the principal amount of $180,000 made by
Gerald D. Ellenburg and Kristin M. Tomczak to Mr. Epple and Michael
D. Edwards, a portion of which was used to purchase the shares of
Common Stock.
Item 4. Purpose of Transaction.
The purchase of the shares of Common Stock described herein by Mr.
Epple was for investment. Although Mr. Epple may acquire additional
shares of Common Stock, he has 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;
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(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, Mr. Epple beneficially owns 279,941
shares of Company Common Stock constituting approximately 0.50% of
the outstanding shares of Common Stock as of August 12, 1997, based
on information provided in the Company's 10-Q filed August 12, 1997.
This Statement is being filed because Mr. Epple may be deemed to be
part of a "group," as described below.
Mr. Epple purchased 239,941 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 Mr. Ellenburg and Kristin M. Tomczak, and
Norton S. Karno, as trustee of three trusts, warrants to purchase a
total of 50,000 shares (the "Warrants") of Common Stock. In addition
to the Shares purchased by Mr. Epple, 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 Mr. Epple, may be
deemed to constitute a "group" within
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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>
Total
Number of Number of Beneficial
Shares Voting Warrants Ownership Percentage
Name Acquired Status Acquired Acquired of Class
---- --------- ------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Gerald D. Ellenburg and 1,800,000 Shared 25,001 1,825,001 3.28%
Kristin M. Tomczak
Norton S. Karno, Trustee of 600,000 Sole 8,333 608,333 1.09%
the Stephanie Lynn Karno
Adult Trust #2, under
Agreement dated December 31,
1969
Norton S. Karno, Trustee of 600,000 Sole 8,333 608,333 1.09%
the Valerie Ann Karno Adult
Trust #2, under Agreement
dated December 31, 1969
Norton S. Karno, Trustee of 600,000 Sole 8,333 608,333 1.09%
the Mitchell Perry Karno
Adult Trust #2, under
Agreement dated December 31,
1969
Michael D. Edwards 159,960 Sole 0 159,960 0.29%
</TABLE>
Mr. Ellenburg and Ms. Tomczak loaned $180,000 to Messrs.
Epple and Edwards, the proceeds of which were used by
Messrs. Epple and Edwards to acquire 239,941 and 159,960
shares, respectively, of Common Stock pursuant to the
Option. Messrs. Epple and Edwards each pledged their shares
of Common Stock as collateral for such loan. As a result of
the foregoing, under Securities and Exchange Commission
Rule 13d-3(d)(3), Mr. Ellenburg and Ms. Tomczak may be
deemed to be the beneficial owners of the shares of Common
Stock owned by Messrs. Epple and Edwards.
Mr. Epple disclaims beneficial ownership of any shares of
Common Stock beneficially owned by Mr. Ellenburg and Ms.
Tomczak, and Messrs. Karno and Edwards, and the filing of
this Statement shall not be construed as an admission that
Mr. Epple is the beneficial owner of such shares.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
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As described under Item 5, above, Mr. Ellenburg and Ms. Tomczak
loaned funds to Messrs. Epple and Edwards and received a pledge
of the shares of Common Stock purchased by Messrs. Epple and
Edwards.
Mr. Ellenburg and Ms. Tomczak, along with Norton S. Karno,
Trustee of the Stephanie Lynn Karno Adult Trust #2, Norton S.
Karno, Trustee of the Valerie Ann Karno Adult Trust #2, and
Norton S. Karno, Trustee of the Mitchell Perry Karno Adult Trust
#2 (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. Option to Purchase Shares
2. Limited Recourse Promissory Note Secured by Stock Pledge
Agreement
3. Stock Pledge Agreement
4. 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/ Jurgen W. Epple
--------------------------
Jurgen W. Epple
6
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
------- ----
<S> <C> <C>
1. Option to Purchase Shares ___
2. Limited Recourse Promissory Note ___
Secured by Stock Pledge Agreement
3. Stock Pledge Agreement ___
4. Finder's Fee Agreement ___
</TABLE>
<PAGE> 1
EXHIBIT 1
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 2
LIMITED RECOURSE PROMISSORY NOTE SECURED
BY STOCK PLEDGED AGREEMENT
$180,000 Clearwater, Florida November 28, 1997
FOR VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, JURGEN EPPLE and MICHAEL EDWARDS (collectively, "Makers"),
jointly and severally promise to pay to GERALD D. ELLENBURG and KRISTIN MARY
TOMCZAK (collectively, "Payees"), or order, at 1520 Gulf Boulevard, Suite 1406,
Clearwater, Florida 33767, or at such other address as Payees may, from time to
time, designate, the sum of One Hundred Eighty Thousand Dollars ($180,000) 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, 2002.
c. Payees. As used herein, the term "Payees" shall
include the herein named Payees and all of said Payees' heirs, successors and
assigns and shall mean the person(s) and/or entity(ies) holding the Payees'
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. Annual Interest Payments. Payments of interest then
accrued shall be due on each anniversary of the Funding Date commencing with
December 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
<PAGE> 2
incurred by Payees in collecting same from Makers (including but not limited to
any attorneys fees or other costs incurred in enforcing Payees' rights
hereunder, (ii) then to past-due, accrued 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. Payment from Finders' Fees. Upon Makers' receipt of
the finders' fees with respect to the purchase of Radius, Inc. stock by Payees
and/or by Norton S. Karno as Trustee of the Stephanie Lynn Karno Adult Trust #2,
and/or by Norton S. Karno as Trustee of the Valerie Ann Karno Adult Trust #2,
and/or by Norton S. Karno as Trustee of the Mitchell Perry Karno Adult Trust #2,
becoming due and payable one year after the Funding Date or thereafter, to
Makers or to any entity affiliated with Makers or either of them, including but
not limited to Matrix Capital, or to any assignee or successor in interest of
Makers or any entity affiliated with Makers or either of them, including but not
limited to Matrix Capital, Makers shall concurrently pay an amount equal to such
finders' fees then paid to Payees (up to the total amount of then accrued but
unpaid interest and principal owed upon this Note), and Payees shall apply such
payment (i) first to any cost or expense incurred by Payees in collecting same
from Makers (including but not limited to any attorneys fees or other costs
incurred in enforcing Payees' rights hereunder), (ii) then to past-due, accrued
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.
d. Payment Upon Appreciation in Value. Makers agree to
pay the entire unpaid balance hereof, together with all then accrued but unpaid
interest thereon at any time that 100,000 shares of Radius, Inc. Stock could
have been sold for $1.80 or more per share, as evidenced by the actual daily
trading volume of Radius, Inc. shares at or above $1.80 per share. The actual
daily trading volume conclusively constituting such evidence shall be any five
consecutive trading sessions. Such payment shall be made within four weeks after
demand therefor by Payees; Payees agree to escrow Radius, Inc.'s shares pledged
pursuant to the Stock Pledge Agreement described in paragraph 5 below with a
transfer agent, broker or escrow agent to facilitate Makers' Sale or margin
transaction with respect to such shares required to make such payment on terms
reasonably satisfactory to Payees and which assure that the security interest of
Payees in said shares is preserved.
e. Final Principal Payment. On the Maturity Date, Makers
shall pay Payees 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.
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5. Security. This Note is secured by a first priority Stock
Pledge Agreement executed by Makers pledging all of their stock of Radius, Inc.
(referred to herein as the "Stock Pledge Agreement").
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 the Stock Pledge Agreement.
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 Stock Pledge Agreement shall, at the
option of Payees of this Note and without notice or demand of any kind
to Makers or any other person, immediately become due and payable; and
ii. Payees 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 Stock Pledge Agreement.
The remedies of Payees, as provided in this Note and in the
Stock Pledge Agreement, shall be cumulative and concurrent and may be exercised
singularly, successively or together, at the sole discretion of Payees, and may
be exercised as often as occasion therefor shall arise. No act or omission or
commission of Payees, 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 Payees. 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 Payees 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 Payees hereof, for the loan,
use, forbearance, or detention of the money to be loaned under this Note or to
compensate Payees for damages to be suffered by reason of a late payment or
default under this
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<PAGE> 4
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 Payees.
8. Limited Recourse. Makers shall be personally liable for the
principal balance hereof only to the extent the sums recovered by Payees
pursuant to the Stock Pledge Agreement and any foreclosure thereunder is less
than the sum of (a) Ninety Thousand Dollars ($90,000) and all accrued but unpaid
interest then owed hereunder. By way of example, in the event Makers default
hereunder, if Payees realize, pursuant to a foreclosure sale of all of Makers'
stock in Radius, Inc. under the Stock Pledge Agreement, net of the foreclosure
costs (including attorneys fees pursuant to paragraph 9 below), the sum of One
Hundred Twenty Thousand Dollars ($120,000), and if at the date of such
foreclosure sale, there is accrued but unpaid interest of Twenty-Two Thousand
Dollars ($22,000) owed upon this Note, then Makers shall have no further
obligation or indebtedness to Payees. By way of further example, if Payees
realize, pursuant to a foreclosure sale of all of Makers' stock in Radius, Inc.
under the Stock Pledge Agreement, net of the foreclosure costs, the sum of One
Hundred Thousand Dollars ($100,000), and if at the date of such foreclosure
sale, there is accrued but unpaid interest of Twenty-Two Thousand Dollars
($22,000) owed upon this Note, then such proceeds would be applied first to the
accrued interest, and the remainder ($78,000) to principal and Makers would
remain personally liable to Payees for Twelve Thousand Dollars ($12,000).
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 Stock Pledge 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 Stock Pledge
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 Stock Pledge 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
Stock Pledge 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
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<PAGE> 5
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:
To Payee: Gerald D. Ellenburg and Kristin Mary Tomczak
1520 Gulf Boulevard, Suite 1406
Clearwater, Florida 33767
To Makers: Jurgen Epple and Michael Edwards
423 Cleveland Street, #6
Clearwater, Florida 33755
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. Payees 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, and his successors,
transferees and assigns and al 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. Subject to the
provisions of Paragraph 8, 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
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<PAGE> 6
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF MAKERS OR
PAYEES.
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 Payees.
MAKERS:
/s/ Jurgen Epple
---------------------------------
Jurgen Epple
/s/ Michael Edwards
---------------------------------
Michael Edwards
6
<PAGE> 1
EXHIBIT 3
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT is made effective the 28th day of November,
1997, (the "Effective Date") by JURGEN EPPLE and MICHAEL EDWARDS, jointly and
severally as "Pledgors," KARNO, SCHWARTZ, FRIEDMAN, SHAFRON & WARREN, A
Partnership Including Professional Corporations as "Pledge Holder," and GERALD
D. ELLENBURG and KRISTIN MAY TOMCZAK as "Pledgees".
1. PLEDGE. Pledgors hereby deposit with Pledge Holder and do hereby, as
of the Effective Date, pledge to Pledgees, 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 $180,000,
including but not limited to the payment, in full, of all such indebtedness and
any interest thereon, and other sums payable to Pledgees upon or with respect to
such indebtedness (collectively, the "Obligations"), Pledgors' property (the
"Collateral") described as
All of Pledgors' shares, but not less than 399,901 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 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 by Pledgors, a first priority lien on such shares.
3. POWER OF SALE ON DEFAULT. Pledgors hereby authorize and empower
Pledgees, upon any default of any one or more of the Pledgors in the prompt
payment or due performance of any of the Obligations, at their 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 additional 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, protect, 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 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
<PAGE> 2
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 pay, satisfy and discharge the Note and any
other indebtedness arising out of or under this Stock Pledge Agreement; fourth,
to pay, satisfy and discharge the duties and obligations of Pledgors pursuant to
any Stock Pledge Agreement hereafter executed by Pledgors with Pledgees'
consent, junior to this Stock Pledge Agreement, and the respective indebtedness
secured thereby, in the order of their respective priority; and fifth, to pay
the surplus, if any, to Pledgors.
5. ADDITIONAL RIGHTS OF PLEDGEES. Pledgees 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 their 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 they may possess under the Uniform
Commercial Code. Pledges 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 them in connection with any such
foreclosure sale. Subject to the provisions of paragraph 8 of the Promissory
Note secured hereby, Pledgees reserve the right to recover any deficiency
judgment arising from such sale or sales, whether judicial or by way of pledge
sale.
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.
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 Pledgees 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, Pledgees, at their 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.
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<PAGE> 3
9. NON-WAIVER. Any forbearance or failure or delay by Pledgees 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 Pledgees shall continue in full force and effect until
such right, power or remedy is specifically waived by an instrument in writing,
executed by Pledgees.
10. RELEASE OF COLLATERAL. When the Obligations shall have been fully
performed and satisfied and Pledgees shall have received payment in full of all
other sums owed hereunder, 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 have heretofore acted as legal
counsel to one or both of Pledgees and after consulting with independent legal
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 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
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<PAGE> 4
have been satisfied and if such notice shall at the time of mailing have been
contained in an envelope addressed as follows:
To Pledgors: Jurgen Epple and Michael Edwards
423 Cleveland Street, #6
Clearwater, Florida 33755
To Pledgee: Gerald D. Ellenburg and Kristin Mary Tomczak
1520 Gulf Boulevard, Suite 1406
Clearwater, Florida 33767
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.
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/ Jurgen Epple
--------------------------
JURGEN EPPLE
/s/ Michael Edwards
--------------------------
MICHAEL EDWARDS
PLEDGEE:
/s/ Gerald D. Ellenburg
--------------------------
GERALD D. ELLENBURG
/s/ Kristin Mary Tomczak
--------------------------
KRISTIN MARY TOMCZAK
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<PAGE> 5
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
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<PAGE> 1
EXHIBIT 4
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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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
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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
