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EXHIBIT 4.4
FEE AGREEMENT
This FEE AGREEMENT (the "Agreement") dated as of January 21, 1999 by and
between The Learning Company, Inc., a Delaware corporation ("TLC"), and
International Microcomputer Software, Inc. a California corporation ("IMSI").
WHEREAS, IMSI currently owes TLC an amount equal to $1,800,000 (the
"Fees") pursuant to a Software License Agreement, dated October 2, 1998, between
TLC and IMSI (the "License Agreement"); and
WHEREAS, TLC and IMSI now desire to set forth certain terms and
provisions with respect to the payment by IMSI of the Fees:
NOW, THEREFORE in consideration of the foregoing and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto hereby agree as follows:
1. Payment of the Fees. Notwithstanding anything to the contrary in the
License Agreement with respect to the form and timing of payment of the Fees,
the obligations to pay the Fees shall the satisfied in full by compliance by
IMSI with the terms and provisions of this Agreement, including without
limitation, Section 2.
2. Issuance of the Shares. On the next business day after the date
hereof, IMSI will issue to TLC 200,000 shares of IMSI's Common Stock (the
"Common Stock"), no par value (collectively, the "Shares").
3. Sale. The Shares may be sold by one or more of the following means of
distribution (subject to the provisions of this Agreement): (a) a block trade in
which the broker-dealer so engaged will attempt to sell Shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account; (c) an over-the-counter distribution in
accordance with the rules of Nasdaq; (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (e) in privately
negotiated transactions.
4. Representations, Warranties and Covenants of IMSI. IMSI represents
and warrants to and covenants with TLC as follows:
a. IMSI is eligible to issue a Registration Statement on Form
S-3 for the resale of the Shares by TLC in accordance with the terms of this
Agreement. In
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addition, a registration statement on Form S-3 with respect to the
Shares, including any amendment or amendments thereto, will (i) be prepared by
IMSI in conformity with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations of the Securities
and Exchange Commission (the "Commission") thereunder (the "Regulations"), and
will (ii) be filed with the Commission under the Securities Act as soon as
possible but in any event no later than February 28, 1999. Such registration
statement, as so amended, including the prospectus, financial statements and
schedules, exhibits and all other documents filed as part thereof, as amended at
the Effective Date, is herein called the "Registration Statement," and the
prospectus, in the form first filed with the Commission pursuant to Rule 424 (b)
of the Regulations or in the form filed as part of the Registration Statement at
the Effective Date, if no Rule 424 (b) filing is required, is herein called the
"Prospectus." Any reference herein to the Registration Statement or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before
the Effective Date or the date of the Prospectus, as the case may be, and any
reference herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement or the Prospectus shall be deemed to refer to and
include (x) the filing of any document under the Exchange Act after the
Effective Date or the date of the Prospectus, as the case may be, which is
incorporated therein by reference and (y) any Such document so filed.
b. IMSI will use best efforts to have the Registration Statement
declared effective as soon thereafter as possible. However, in the event that
IMSI's direct actions result in the Registration Statement not being declared
effective by April 30, 1999, TLC shall have the option to terminate this
agreement and return the Shares to IMSI. In such event, the amounts payable to,
and all rights of, TLC under the License Agreement shall be reinstated and all
amounts due under the License Agreement shall become due to TLC.
c. At the date the Registration Statement becomes effective
under the Securities Act (the "Effective Date") or the time of effectiveness of
any post-effective amendment to the Registration Statement, at the time the
Prospectus is first filed with the Commission pursuant to Rule 424 (b) of the
Regulations (if a Rule 424 (b) filing is required), at the time any supplement
to or amendment of the Prospectus is filed with the Commission and at the time
any document filed under the Exchange Act is filed, the Registration Statement
and the Prospectus and any amendments thereof and supplements thereto complied
or will comply in all material respects with the applicable provisions of the
Securities Act and the Regulations or the Exchange Act and the respective rules
and regulations thereunder and do not or will not contain an untrue statement of
a material fact and do not or will not omit to state any material fact required
to be stated therein or
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necessary in order to make the statements therein (i) in the case of the
Registration Statement, not misleading and (ii) in the case of the Prospectus,
in the light of the circumstances under which they were made, not misleading.
d. The Shares, when issued and delivered in accordance with this
Agreement, will be duly and validly issued and outstanding, fully paid and
non-assessable and will not have been issued in violation of or be subject to
any preemptive rights.
e. If at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act any event shall occur as a
result of which the Prospectus as then amended or supplemented, in the judgment
of TLC or IMSI, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary at any time to amend or
supplement the Prospectus or Registration Statement to comply with the
Securities Act or the Regulations, or to file under the Exchange Act so as to
comply therewith any document incorporated by reference in the Registration
Statement or the Prospectus or in any amendment thereof or supplement thereto,
(i) IMSI will notify TLC promptly and prepare and file with the Commission an
appropriate amendment or supplement (in form and substance satisfactory to TLC)
which will correct such statement or omission or which will effect such
compliance and will use its best efforts to have any amendment to the
Registration Statement docked declared effective by the Commission as soon as
possible and (ii) TLC shall suspend trading in the Shares until (A) such
amendment or supplement to the Prospectus has been filed or (B) any amendment to
the Registration Statement has been declared effective by the Commission.
f. IMSI will provide TLC with conformed copies of the
Registration Statement and copies of the Prospectus.
g. IMSI will pay all fees and expenses with respect to the
preparation and filing of the Registration Statement and the registration of the
Shares.
5. Conditions to TLC's Obligations. The obligations of TLC hereunder are
subject to the accuracy, when made on the date hereof, of the representations
and warranties of IMSI contained herein, to the performance by IMSI of its
obligations hereunder and to the receipt by TLC of an opinion of Xxxxxxxx
Xxxxxxx, IMSI General Counsel, addressed to TLC, dated the Effective Date, and
in form and substance satisfactory to TLC, to the effect that:
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a. all of the outstanding shares of Common Stock are duly and
validly authorized and issued, are fully paid and nonassessable and were not
issued in violation of or subject to any preemptive rights;
b. the issuance of the Shares has been duly authorized by
requisite corporate action and, when issued and delivered by IMSI in accordance
with this Agreement, the Shares will be validly issued, fully paid and
nonassessable and will not have been issued in violation of or subject to any
preemptive rights;
c. the Registration Statement, at the Effective Date, and the
Prospectus, at its date, and any amendments thereof or supplements thereto, at
their respective dates (other than financial statements and schedules and other
financial and statistical data included or incorporated by reference therein, as
to which no opinion need be rendered), complied in all material respects to the
requirements of the Securities Act and the Regulations and such counsel has no
reason to believe that the Registration Statement, at the Effective Date,
contained an untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, at its date, contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and
d. each of the documents filed under the Exchange Act and
incorporated by reference in the Registration Statement, the Prospectus or any
amendment thereof or supplement thereto (other than the financial statements and
schedules and other financial and statistical data included or incorporated by
reference therein, as to which no opinion need be rendered), at the time it was
filed with the Commission, complied in all material respects to the requirements
of the Exchange Act and such counsel has no reason to believe that any of such
documents, when such documents were so filed, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such documents were so filed, not misleading.
6. Indemnification.
a. IMSI agrees to indemnify and hold harmless TLC and each
person (each, a "TLC Controlling Person"), if any, who controls TLC within the
meaning of Section 15 of the Securities Act or Section 20 (a) of the Exchange
Act, against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any and
all expenses whatsoever incurred in
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investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or the Prospectus, or in any
supplement thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that IMSI shall not be liable to TLC or any TLC Controlling
Person for any such losses, liabilities, claims, damages or expenses which arise
out of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission contained or made in the Registration Statement or
the Prospectus or any amendment thereof or Supplement thereto in reliance upon
and in conformity with information furnished to IMSI by TLC. IMSI and TLC hereby
agree that the number of shares held by TLC, and the possible manner of
reselling the Shares, is the only information supplied to IMSI by TLC for use in
connection with the preparation of the Registration Statement and the
Prospectus. This Indemnity Agreement will be in addition to any liability which
IMSI may otherwise have, including under this Agreement.
b. Promptly after receipt by any indemnified party under
subsection a. above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6). In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying party in connection with the
defense of such action, (ii) the indemnifying party shall not have employed
counsel to have charge of the defense of such action within a reasonable time
after notice of commencement of the action, or (iii) such indemnified party
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to the
indemnifying party (in which case the indemnifying
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party shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events such fees and expenses
shall be borne by the indemnifying party. Anything in this subsection to the
contrary notwithstanding, the indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent:
PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
7. Entire Agreement. This Agreement and the License Agreement (to the
extent not inconsistent herewith) constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all prior
written agreements and negotiations and oral understandings, if any, with
respect thereto. This Agreement may not be amended or supplemented except by an
instrument in writing signed by each of the parties hereto.
8. Notices. All notices, requests and other communications hereunder
shall be in writing and delivered in person or by registered or certified mail
(postage prepaid, return receipt requested), overnight courier or facsimile,
addressed as follows:
if to TLC, to:
The Learning Company, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Esq.
if to IMSI, to:
International Microcomputer Software, Inc.
00 Xxxxxxx Xxx
Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx-Xxxxxx
Legal Director for IMSI
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The address of a party, for the purposes of this Section 8, may be changed by
giving written notice to the other party of such change in the manner provided
herein for giving notice. All notices, requests, demands and other
communications hereunder shall be
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deemed to have been duly given: at the time delivered by hand, if personally
delivered; five calendar days mailing, if sent by registered or certified mail;
the next business clay after timely delivery to the courier, if sent by
overnight courier; and when receipt is acknowledged, if sent by facsimile
transmission (except that a notice of change of address shall not be deemed to
have been given until actually received by the addressee).
9. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the Commonwealth of Massachusetts, without regard to
the conflicts of law principles thereof.
10. Investment Representations. TLC represents and warrants that it is
an "accredited investor" as defined by Regulation D: that it is acquiring the
Shares for its own account, for the purpose of investment and not with a view
to, or resale in connection with, any distribution thereof; that TLC has had
access to all information regarding IMSI and its present business, assets,
liabilities and financial condition, that TLC reasonably considers important in
making the decision to acquire the Shares under this Agreement; and that TLC
understands that the Shares are restricted securities and may not be sold except
pursuant to the Form S-3, some other registration statement, or pursuant to an
applicable exemption from federal and state registration requirements.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the date first set forth above.
THE LEARNING COMPANY, INC.
By: _________________________
Name: R. Xxxxx Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
INTERNATIONAL MICROCOMPUTER
SOFTWARE, INC.
By: ______________________________
Name: Xxxxxx Xxxxx
Title: Chief Executive Officer
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