Exhibit 99.3
STANDSTILL AGREEMENT
STANDSTILL AGREEMENT (this "Agreement") dated as of December
22, 1995 by and between Tribune Company, a Delaware corporation ("Stockholder"),
and SoftKey International Inc., a Delaware corporation ("Issuer").
On November 30, 1995, Stockholder and Issuer: (a) executed
and delivered a Securities Purchase Agreement (the "Purchase Agreement")
providing for the issuance and sale by Issuer, and the purchase by Stockholder,
of $150,000,000 principal amount of 5-1/2% Senior Convertible/Exchangeable Notes
due 2000 (the "Notes"), which may be (i) exchanged for Issuer's 5-1/2% Series C
Convertible Preferred Stock (the "Preferred Stock") which may be converted into
shares of common stock, par value $.01 per share, of Issuer (the "Common
Stock"), or (ii) converted directly into shares of Common Stock; and (b)
together with certain wholly owned subsidiaries, executed and delivered an
Agreement and Plan of Merger (the "Merger Agreement") providing for two separate
re verse subsidiary mergers of wholly owned subsidiaries of Issuer with and into
wholly owned subsidiaries of Stockholder in which Issuer will issue to
Stockholder, and Stockholder will receive from Issuer, shares of Common Stock.
This Agreement is the Standstill Agreement referenced in the
Merger Agreement and sets forth certain terms and conditions upon which the
Issuer will issue and deliver to Stock holder, and Stockholder (a) will receive
and accept from Issuer, (b) owns and holds, and (c) will own and hold, the
shares of Common Stock acquired by Stockholder, or any shares of Common Stock
which Stockholder has the right to acquire, pursuant to the Purchase Agreement
and the Merger Agreement (the "Shares").
In consideration of the mutual agreements contained in the
Purchase Agreement, the Merger Agreement and herein, and for other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties agree as follows:
1. Stockholder's Representations and Warranties.
Stockholder represents and warrants to Issuer as follows:
(a) Stockholder is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware;
(b) Stockholder (i) has the full power and
authority to execute and deliver this Agreement, perform its obligations
hereunder and consummate the transactions contemplated hereby and (ii) has taken
all necessary action to
authorize the execution, delivery and performance by Stockholder
of this Agreement;
(c) this Agreement has been duly and validly
authorized, executed and delivered by Stockholder and constitutes
the valid and binding obligation of Stockholder, enforceable in
accordance with its terms;
(d) Stockholder (or any direct or indirect
subsidiary of Stockholder and all persons controlling, controlled by or under
common control with Stockholder ("Affiliates"), as the case may be), is, or upon
issuance to it by Issuer will be, the sole beneficial holder of all the Shares,
and Stockholder and Affiliates have not granted or permitted to exist any liens,
claims, options, proxies, voting agreements, charges or encumbrances of
whatever nature affecting the Shares;
(e) the Notes and Shares owned and held by Stock
holder and Affiliates as of the date hereof constitute all of the
securities of Issuer owned by Stockholder and Affiliates;
(f) Stockholder (or Affiliates, as the case may
be) is not acquiring the Notes and Shares owned and held by Stockholder and is
not acquiring the Shares which may be acquired after the date hereof with the
intent or objective of obtaining control of the business, operations or affairs
of Issuer; and
(g) except as set forth in the Purchase Agreement
and the Merger Agreement, neither Stockholder nor any Affiliate has outstanding
any option, warrant or other right to acquire, directly or indirectly, any
securities of Issuer or any securities which are convertible into or
exchangeable or exercisable for any securities of Issuer, nor is Stockholder or
any Affiliate subject to any agreement (whether written or in the nature of an
informal understanding or arrangement) which allows or obligates the Stockholder
or any such Affiliate to vote or acquire any securities of the Issuer.
2. Issuer's Representations and Warranties. Issuer
represents and warrants to Stockholder as follows:
(a) Issuer is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware;
(b) Issuer (i) has the full power and authority
to execute and deliver this Agreement, perform its obligations hereunder and
consummate the transactions contemplated hereby and (ii) has taken all necessary
action to authorize the execution, delivery and performance by Issuer of this
Agreement; and
(c) this Agreement has been duly and validly
authorized, executed and delivered by Issuer and constitutes the
valid and binding obligation of Issuer, enforceable in accordance
with its terms.
3. Covenants of Stockholder. Stockholder covenants with Issuer
that, without the consent of Issuer, for a period commencing on the date hereof
and continuing through the fifth anniversary of the date hereof Stockholder and
Affiliates, singly or as part of a group, directly or indirectly, through one or
more intermediaries or otherwise, will not:
(a) purchase, acquire or own, or offer, propose
or agree to purchase, acquire or own, directly or indirectly, any securities of
Issuer which are entitled to vote generally in the election of directors (other
than upon occurrence of a contingency) ("Voting Securities"), any option,
warrant or other right to acquire, directly or indirectly, any Voting Securities
or any securities which are convertible into or exchangeable or exercisable for
Voting Securities, if, immediately after such purchase or acquisition,
Stockholder and Affiliates would beneficially own, in the aggregate, Voting
Securities representing an amount (the "Threshold Amount") which exceeds the
greater of 20% of Issuer's outstanding Voting Securities or such percentage of
the Issuer's outstanding Voting Securities which the sum of the Shares issued in
connection with the Merger Agreement and the Shares issuable upon the conversion
of the Notes issued in connection with the Purchase Agreement (taking into
account any Voting Securities into which such Notes (or any Preferred Stock for
which such Notes are exchanged) may from time to time be convertible as a result
of application of the anti-dilution provisions applicable to the Notes or the
Preferred Stock) would constitute on a fully diluted basis on the date of the
later of the closings of the transactions contemplated by the Merger Agreement
and the Purchase Agreement; provided, however, that notwithstanding anything to
the contrary contained herein, the foregoing restriction shall not be deemed to
be violated or applicable if Stockholder is not otherwise in breach of this
Agreement and (i) the percentage of the outstanding Voting Securities
beneficially owned, in the aggregate, by Stockholder and Affiliates is increased
as a result of a recapitalization of Issuer, a repurchase of securities by
Issuer or any other action taken solely by Issuer, (ii) a benefit plan
maintained for employees of Stockholder and Affiliates acquires up to 1% (in the
aggregate) of the outstanding Common Stock solely for purposes of investment, or
(iii) Issuer breaches its obligation under Section 4(b) hereof; and provided,
further, that so long as Stockholder is not otherwise in breach of this
Agreement, (i) if a third party (which term for purposes of this Agreement shall
include any group as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended) makes a tender or exchange offer which, if consummated,
would result in such third party owning at least a majority of the Voting
Securities and Issuer's Board of Directors does not oppose such tender or
exchange offer at the time at which it is required by applicable securities laws
to make a recommendation regarding such tender or exchange offer
to Issuer's stockholders, then Stockholder may make and consummate a tender or
exchange offer for a number of Voting Securities equal to or greater than the
number of Voting Securities which such third party seeks to purchase pursuant
to such tender or exchange offer, (ii) if a third party acquires beneficial
ownership of at least 30% of the outstanding Voting Securities, and Stockholder
is prohibited by the terms of this Agreement from acquiring more than 30% of the
outstanding Voting Securities, then Stockholder may purchase up to the same
number of Voting Securities as such third party or may make and consummate a
tender or exchange offer for all outstanding Voting Securities, and (iii) if
Issuer's Board of Directors approves a definitive written agreement with respect
to a business combination or other extraordinary transaction involving Issuer
as a result of which more than 50% of the assets of Issuer would be transferred
or a Change of Control (as defined below) would occur, then Stockholder may
make and consummate a tender or exchange offer for all outstanding Voting
Securities, and if Stockholder is permitted to make and consummate a tender or
exchange offer pursuant hereto, none of the restrictions contained in this
Section 3 (with the exception of Section 3(f) and the application of Section
3(g) to Section 3(f)) shall apply to Stockholder's activities with regard to any
stockholder vote or proposal in connection therewith or in connection with any
alternative transaction or action proposed in response thereto; "Change of
Control" shall mean any transaction as a result of which (i) the owners of a
majority of the Voting Securities of Issuer immediately prior to consummation of
the transaction will not continue to own upon completion of the transaction (A)
a majority of the Voting Securities of Issuer or (B) a majority of the Voting
Securities of any other person into or for the securities of which the Voting
Securities of Issuer will be converted or exchanged as a result of the
transaction or (ii) as a result of which any third party is entitled to elect a
majority of the members of the Board of Directors of Issuer;
(b) solicit, or encourage any other person to
solicit, "proxies" or become a "participant" or otherwise engage in any
"solicitation" (as such terms are defined or used in Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) in opposition
to a recommendation of a majority of the directors of Issuer with respect to any
matter; seek to advise or influence any person (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to the voting of any securities of
the Issuer; or execute any written consent in lieu of a meeting of holders of
securities of Issuer or any class thereof; provided, however, that if
Stockholder is entitled to elect directors of Issuer pursuant to Section 3.3 of
the Certificate of Designation of the Preferred Stock (the "Certificate of
Designation"), nothing in this Section 3(b) shall be construed to prohibit
Stockholder from soliciting proxies for the election of such directors from the
holders of Defaulted Parity Stock (as defined in the Certificate of
Designation);
(c) initiate, propose or otherwise solicit
stockholders for the approval of one or more stockholder proposals with respect
to Issuer, as described in Rule 14a-8 under the Exchange Act;
(d) acquire control of Issuer or directly or
indirectly participate in or encourage the formation of any "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) owning or seeking to acquire
beneficial ownership of securities of the Issuer or affect control of Issuer;
(e) otherwise act, directly or indirectly, alone
or in concert with others, to seek to control or influence in any manner the
management, business, operations, board of directors, policies or affairs of
Issuer, or propose or seek to effect any form of business combination
transaction with Issuer or any affiliate thereof or any restructuring,
recapitalization or other similar transaction with respect to Issuer;
(f) deposit any of the Shares into a voting
trust, or subject any of the Shares to any agreement or arrangement with respect
to the voting of the Shares or any agreement having similar effect to any of the
foregoing in this Section 3(f); or
(g) (i) encourage any person, firm, corporation,
group or other entity to engage in any of the actions covered by clauses (a)
through (e) of this Section 3 or make any public arrangement (or make other
communication with or to Issuer or otherwise which, in the opinion of counsel to
Issuer, would require public announcement) with respect to any matter set forth
in clause (a) through (f) of this Section 3;
provided, however, that actions taken by any representative of Stockholder on
the Board of Directors of Issuer, acting solely in his or her capacity as such a
director, shall not violate this Section 3. Stockholder further covenants to
cause the termination or resignation of any director being removed from the
Board of Directors of Issuer in accordance with Section 4(b) hereof.
4. Covenants of Issuer. Issuer covenants with
Stockholder that:
(a) prior to (i) the closing of the transactions
contemplated by the Purchase Agreement and the Merger Agreement, whichever
occurs earlier (the "First Closing"), or, if later, (ii) any other event or
transaction which would result in Stockholder beneficially owning 15% or more of
the outstanding Voting Securities, the Board of Directors of Issuer shall
approve any and all agreements, events or transactions for purposes of Section
203 of the Delaware General Corporation Law ("Section 203") in order that the
restrictions contained in Section 203 shall not be applicable to Stockholder and
Affiliates;
(b) Immediately after the First Closing, and so
long as Stockholder shall not be in breach of any of its obligations hereunder,
the Board of Directors of Issuer shall take all necessary actions to increase
the size of such Board by one and to fill the vacancy created thereby with an
individual designated in writing by Stockholder and reasonably acceptable to
Issuer, and, if at any time Issuer's Board of Directors shall consist of 10 or
more members and the transactions contemplated by both the Purchase Agreement
and the Merger Agreement shall have been consummated, then Issuer's Board of
Directors shall take all necessary actions to increase further the size of the
Board by one and to fill the additional vacancy created thereby with a second
individual designated in writing by Stockholder and reasonably acceptable to
Issuer, and Issuer shall thereafter take such action as necessary or appropriate
to include such individuals among Issuer's nominees for director, shall
recommend to its stockholders a vote in favor of such individuals at any annual
or special meeting of stockholders called to vote upon the election or removal
of any directors, and shall cause all shares of capital stock of Issuer over
which Issuer exercises direct or indirect voting power to be voted in favor of
the election of the individuals designated in writing hereunder by Stockholder;
provided, however, that at such time as Stockholder has the right to designate
two directors and Stockholder beneficially owns fewer than 5,000,000 but at
least the lesser of (i) 2,800,000 shares of Common Stock (including, for
purposes of this calculation, the number of shares of Common Stock into which
the Notes and Preferred Stock beneficially owned by Stockholder are then
convertible) and (ii) 75% of the sum of any Shares issued in connection with the
Merger Agreement and the Shares issuable upon the conversion of any Notes issued
in connection with the Purchase Agreement (taking into account any Voting
Securities into which such Notes (or any Preferred Stock for which such Notes
are exchanged) may from time to time be convertible as a result of the
application of the anti-dilution provisions applicable to the Notes or the
Preferred Stock) (the lesser of the foregoing clauses (i) and (ii) being
referred to herein as the "Lesser Amount"), then one of Stockholder's nominees
shall be re moved from Issuer's Board of Directors and Issuer's obligations
under this Section 4(b) shall only apply in respect of the election of one
nominee of Stockholder, and at such time as Stockholder owns fewer shares of
Common Stock than the Lesser Amount, Stockholder's remaining or, as the case may
be, sole nominee shall be removed from Issuer's Board of Directors and Issuer
shall be relieved of its obligations under this Section 4(b); and
(c) Issuer will not, for so long as this
Agreement is effective, enter into or adopt any plans, agreements, arrangements
or understandings which have the effect of materially impeding, preventing or
prohibiting Stockholder from beneficially owning, in the aggregate, the
Threshold Amount.
5. Specific Performance. Issuer and Stockholder each
acknowledge and agree that in the event of any breach of this Agreement, the
non-breaching party would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that Issuer and Stockholder, in
addition to any other remedy to which they may be entitled at law or in equity,
shall be entitled to compel specific performance of this Agreement in any action
instituted in the federal courts located in the State of Delaware, or, in the
event said courts would not have jurisdiction for such action, in any court of
the United States or any state having subject matter jurisdiction. Issuer and
Stockholder each consent to personal jurisdiction in any such action brought in
the federal courts located in the State of Delaware and to service of process
upon it in the manner set forth in Section 7(g) hereof and addressed to the
General Counsel of the recipient at the address set forth in Section 7(g).
6. Expenses. All fees and expenses incurred by
Stockholder will be borne by Stockholder, and all fees and expenses incurred by
Issuer in connection with this Agreement will be borne by Issuer.
7. Miscellaneous.
(a) This Agreement, together with the Purchase
Agreement, the Merger Agreement and the other agreements contemplated hereby and
thereby, constitute the entire agreement, and supersede all prior agreements and
understandings, whether oral or written, among the parties hereto, with respect
to the subject matter hereof. This Agreement may not be amended orally, but only
by an instrument in writing signed by each of the parties to this Agreement.
(b) This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their heirs, legal representatives,
successors and assigns.
(c) Section headings contained in this Agreement
are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
(d) All representations, warranties and covenants
shall survive the execution and delivery hereof.
(e) This Agreement may be executed in any number
of counterparts, each of which shall, when executed, be deemed to be an original
and all of which shall be deemed to be one and the same instrument.
(f) This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without reference to the conflict of laws principles thereof.
(g) All notices and other communications under
this Agreement shall be in writing and delivery thereof shall be deemed to have
been made either (i) if mailed, when received, or (ii) when transmitted by hand
delivery, telegram, telex, FedEx or other overnight courier service, telecopier
or facsimile transmission (in either case, if confirmed), to the party entitled
to receive the same at the address or facsimile number set forth in the Merger
Agreement (as the same may be amended or modified in accordance with the terms
thereof).
(h) Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(i) This Agreement shall terminate and be of no
further effect if the Purchase Agreement and the Merger Agreement shall have
each been terminated in accordance with their respective terms.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
each of Stockholder and Issuer has executed or caused this Agreement to be
executed as of the date first above written.
TRIBUNE COMPANY
By /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx Greneskso
Title: Sr. Vice President/
C.F.O.
SOFTKEY INTERNATIONAL INC.
By /s/ R. Xxxxx Xxxxxx
Name: R. Xxxxx Xxxxxx
Title: Chief Financial
Officer
