<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1998
REGISTRATION NO. 333-61823
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GETTY IMAGES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
98-0177556
(I.R.S. Employer Identification No.)
<TABLE>
<S> <C>
2101 FOURTH AVENUE 101 BAYHAM STREET
FIFTH FLOOR LONDON, ENGLAND
SEATTLE, WASHINGTON 98121 NW1 0AG
(206) 695-3400 (011 44 171) 544-3456
</TABLE>
(Addresses, Including Zip Code, and Telephone Numbers, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------------
HEATHER B. REDMAN
GETTY IMAGES, INC.
2101 FOURTH AVENUE
FIFTH FLOOR
SEATTLE, WASHINGTON 98121
(206) 695-3400
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
------------------------------
Copy to:
PAMELA GIBSON
SHEARMAN & STERLING
199 BISHOPSGATE
LONDON, ENGLAND
EC2M 3TY
(011 44 171) 920-9000
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION
DATED NOVEMBER 12, 1998
$75,000,000
[LOGO]
4.75% CONVERTIBLE SUBORDINATED NOTES DUE 2003
------------------
This Prospectus relates to the 4.75% Convertible Subordinated Notes due 2003
(the "Notes"), of Getty Images, Inc., a Delaware corporation (the "Company"),
sold otherwise than in reliance on Regulation S (the "Registrable Notes") under
the Securities Act of 1933, as amended (the "Securities Act"), and the shares of
the Company's common stock, par value $0.01 per share ("Common Stock"), issuable
upon conversion of the Registrable Notes. The Registrable Notes registered
hereby were issued and sold on May 20, 1998 (the "Original Offering") in
transactions exempt from the registration requirements of the Securities Act, to
persons reasonably believed by BT Alex. Brown, BancAmerica Robertson Stephens,
Donaldson Lufkin & Jenrette Securities Corporation and Hambrecht & Quist, as the
initial purchasers (the "Initial Purchasers") of the Registrable Notes, to be
"qualified institutional buyers" (as defined by Rule 144A under the Securities
Act) or other institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under Regulation D of the Securities Act). The
Registrable Notes and the Common Stock issuable upon conversion thereof may be
offered and sold from time to time by the holders named herein (collectively,
the "Selling Holders") pursuant to this Prospectus. The Registration Statement
of which this Prospectus is a part has been filed with the Securities and
Exchange Commission pursuant to a registration rights agreement dated May 20,
1998 (the "Registration Agreement") between the Company and the Initial
Purchasers, entered into in connection with the Original Offering.
The Registrable Notes are convertible into shares of Common Stock, at any
time following the last date of the initial issuance through maturity, unless
previously redeemed or repurchased, at a conversion price of $28.5075 per share,
subject to certain adjustments. See "Description of Registrable
Notes--Conversion of Registrable Notes". The Common Stock is quoted on The
Nasdaq National Market ("Nasdaq") under the symbol of "GETY". On November 6,
1998, the last reported sale price of the Common Stock was $12.50 per share.
Interest on the Registrable Notes is payable on June 1 and December 1 of
each year, commencing on December 1, 1998. The Registrable Notes will mature on
June 1, 2003 unless previously redeemed or repurchased. The Registrable Notes
are not redeemable by the Company prior to June 1, 2001. Thereafter, the
Registrable Notes will be redeemable on at least 20 days' notice at the option
of the Company, in whole or in part, at the redemption prices set forth herein,
in each case together with accrued and unpaid interest. Subject to certain
restrictions and conditions, in the event of a Change of Control (as defined),
each holder of the Registrable Notes will have the right to require the Company
to repurchase all or any portion of such holder's Registrable Notes at 100% of
the principal amount thereof, plus accrued and unpaid interest. See "Description
of Registrable Notes--Optional Redemption by the Company" and "--Repurchase of
Registrable Notes at the Option of Holders Upon Change of Control".
(CONTINUED ON NEXT PAGE)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE
REGISTRABLE NOTES OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITY AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER 12, 1998.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The Registrable Notes are general unsecured obligations of the Company and
will be subordinated in right of payment to all existing and future Senior
Indebtedness (as defined) of the Company. The Indenture (as defined) will not
restrict the incurrence of Senior Indebtedness or other indebtedness of the
Company and its subsidiaries. As of September 30, 1998, the Company had
approximately $1 million of indebtedness and other liabilities that constituted
Senior Indebtedness. The Registrable Notes are also effectively subordinated to
all existing and future indebtedness and other liabilities of the Company's
subsidiaries. As of September 30, 1998, the Company's subsidiaries had
approximately $61 million of outstanding indebtedness and other liabilities
(including trade payables and excluding intercompany liabilities and Senior
Indebtedness). See "Description of Registrable Notes--Subordination of
Registrable Notes".
The Registrable Notes issued and sold in the Original Offering in reliance
on Rule 144A under the Securities Act have been designated for trading on the
Private Offerings, Resales and Trading through Automatic Linkages ("PORTAL")
market of the National Association of Securities Dealers, Inc. The Registrable
Notes sold pursuant to the Registration Statement of which this Prospectus forms
a part are not expected to remain eligible for trading on PORTAL.
The Registrable Notes and the Common Stock issuable upon conversion of the
Registrable Notes may be sold by the Selling Holders from time to time directly
to purchasers or through agents, underwriters or dealers. See "Selling Holders"
and "Plan of Distribution". If required, the names of any such agents or
underwriters involved in the sale of the Registrable Notes and the Common Stock
issuable upon conversion of the Registrable Notes in respect of which this
Prospectus is being delivered and the applicable agent's commission, dealer's
purchase price or underwriter's discount, if any, will be set forth in an
accompanying supplement to this Prospectus (the "Prospectus Supplement").
The Selling Holder will receive all of the net proceeds from the sale of the
Registrable Notes and the Common Stock issuable upon conversion of the
Registrable Notes and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the Registrable Notes and the
Common Stock issuable upon conversion of the Registrable Notes. The Company is
responsible for payment of all other expenses incident to the offer and sale of
the Registrable Notes and the Common Stock issuable upon conversion of the
Registrable Notes.
The Selling Holders and any broker-dealer, agents, or underwriters which
participate in the distribution of the Registrable Notes and the Common Stock
issuable upon conversion of the Registrable Notes may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Registrable Notes and
Common Stock issuable upon conversion of the Registrable Notes purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act. See "Plan of Distribution" for a description of indemnification
arrangements.
Any Initial Purchaser who is also a Selling Holder may be, depending on
facts and circumstances, a statutory underwriter and must acknowledge in writing
prior to resale that it will deliver a prospectus in connection with any resale
of the Registrable Notes or underlying Common Stock. By so acknowledging and
delivering a prospectus, an Initial Purchaser who is also a Selling Holder, will
not be deemed to admit that it is an underwriter within the meaning of the
Securities Act.
--------------------------
IN ADDITION TO THE HISTORICAL INFORMATION CONTAINED HEREIN, THE DISCUSSION
IN THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT, AND SECTION 27E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), THAT INVOLVE RISKS AND
UNCERTAINTIES, SUCH AS STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES,
EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS
SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS
WHENEVER THEY APPEAR IN THIS PROSPECTUS. THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDED THOSE DISCUSSED BELOW AS WELL AS THOSE
CAUTIONARY STATEMENTS AND OTHER FACTORS SET FORTH ELSEWHERE OR INCORPORATED BY
REFERENCE HEREIN.
--------------------------
In this Prospectus, references to "dollars" or "$" are to United States
Dollars and references to "pounds sterling" or "L" are to United Kingdom pounds
sterling. This Prospectus contains trademarks and registered trademarks of the
Company and other companies.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange Act
of 1934 and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). The reports and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of
the Commission located at 7 World Trade Center, Room 1300, 13th Floor, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can also be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Such reports and other
information are also available at a website maintained by the Commission that
contains reports, proxy and information statements and other information that
registrants file electronically with the Commission. The address of such site
is: http://www.sec.gov. In addition, such material may be inspected and copied
at the offices of the National Association of Securities Dealers, Inc., 1935 K
Street, N.W., Washington, D.C. 20006. The Company's Common Stock is quoted on
Nasdaq under the symbol "GETY".
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the offering
of the Securities made hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Securities, reference is
hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1997, as amended by Amendment No. 1 thereto on Form 10-K/A, filed with
the Commission on April 28, 1998, as further amended by Amendment No. 2
thereto on Form 10-K/A, filed with the Commission on August 19, 1998;
(b) The Company's Current Report on Form 8-K, filed with the Commission
on February 13, 1998;
(c) The Company's Current Report on Form 8-K, filed with the Commission
on February 24, 1998, as amended by Amendment No. 1 thereto on form 8-K/A,
filed with the Commission on April 27, 1998;
(d) The Company's Current Report on Form 8-K, filed with the Commission
on May 6, 1998;
(e) The Company's Current Report on Form 8-K, filed with the Commission
on May 8, 1998;
(f) The Company's Current Report on Form 8-K filed with the Commission
on May 13, 1998;
(g) The Company's Current Report on Form 8-K filed with the Commission
on August 13, 1998;
(h) The Company's Current Report on Form 8-K filed with the Commission
on August 19, 1998;
(i) The Company's Current Report on Form 8-K filed with the Commission
on September 30, 1998;
(j) The Company's Current Report on Form 8-K filed with the Commission
on November 4, 1998;
(k) The Company's Current Report on Form 8-K filed with the Commission
on November 10, 1998;
(l) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998; and
(m) The Company's Registration Statement on Form 8-A filed with the
Commission on February 9, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of the filing of this Registration
Statement of which this Prospectus forms a part and prior to the earlier of (i)
June 1, 2003 and (ii) the date of the redemption or conversion of the Notes,
shall be deemed to be incorporated by reference into this Prospectus and be a
part hereof from the dates of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes this Prospectus to the extent that a statement contained herein, or
in any other document subsequently filed with the Commission which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference herein). Requests should be directed to
Getty Images, Inc., 2101 Fourth Avenue, Fifth Floor, Seattle, Washington 98121,
Attention: Heather B. Redman (telephone: (206) 695-3400).
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO CONTAINED
ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. AS USED IN THIS
PROSPECTUS, UNLESS OTHERWISE INDICATED, REFERENCES TO THE "COMPANY" AND "GETTY
IMAGES" ARE TO GETTY IMAGES, INC. AND ITS CONSOLIDATED SUBSIDIARIES. THE
STATEMENTS IN THIS PROSPECTUS THAT ARE NOT HISTORICAL ARE FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT
OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE
IN THIS PROSPECTUS.
Getty Images is a leading global visual content provider. Getty Images owns
and controls content across all major categories of the non-commissioned sector
of the visual content industry. As a result of its international network of
wholly owned offices, agents and distributors and its position as a leading
visual content provider on the World Wide Web, Getty Images is able to provide
its customers access to its images anywhere and at any time. Its visual content
collections include Allsport Photographic Limited, a leading global sports
photographic agency, Energy Film Library, a leading stock footage company, Gamma
Liaison, a leading North American news and reporting agency, Hulton Getty, a
large privately owned collection of archival photography, and PhotoDisc, Inc., a
leader in the development and marketing of digital stock photography and in
electronic commerce within the visual content industry.
Getty Images markets and distributes its image and footage products through
a diverse and broad set of channels. Its international network of wholly owned
offices, including offices in London, Seattle, Amsterdam, Barcelona, Brussels,
Chicago, Copenhagen, Hamburg, Hong Kong, Los Angeles, Munich, New York, Paris,
Sao Paolo, Stockholm, Sydney, Tokyo, Toronto and Vienna, and agents and
distributors in over 50 countries, provide local, market specific support and
services. Getty Images also produces print and CD-ROM catalogs which are
distributed widely to existing and potential customers and used to select
appropriate images. The Company's on-line sales and marketing, through systems
such as PhotoDisc's Web site and Allsport's proprietary subscription-based
system, is key to support what the Company believes are a growing number of
customers who prefer to select and purchase visual content products on-line.
Expanding and broadening the reach of these systems and developing similar
systems for distribution of the Company's visual content collections is a
central strategic focus of the Company.
THE VISUAL CONTENT INDUSTRY
The visual content industry supplies images to a varied and growing customer
base, ranging from major multinational corporations to individual consumers.
Images are used to communicate messages in a wide variety of applications,
including print, electronic and broadcast advertising, direct mail and marketing
brochures, educational and training publications, books, magazines, newspapers,
corporate communications and annual reports, motion pictures, broadcasting,
CD-ROM products, sites on the Web, other on-line uses, sales and in-house
presentations and various consumer uses, such as prints, personal web sites,
screen savers and electronic and print greeting cards.
Visual content can be broadly divided into commissioned imagery and
non-commissioned imagery. Commissioned images are commissioned from
photographers and cinematographers by particular clients for a single
predetermined application. Non-commissioned images, commonly referred to as
"stock", are provided by agencies that maintain libraries of selected images
which can be licensed multiple times for use by different clients for different
purposes. Getty Images is primarily active in the non-commissioned sector of the
visual content industry. Getty Images believes that the market share of
non-commissioned imagery has been increasing as the quality of images available
from non-commissioned agencies has become comparable to the quality of
commissioned images. Non-commissioned imagery offers the advantages of lower
cost, immediate availability and the ability to preview an image for
appropriateness prior to license.
4
<PAGE>
Getty Images believes that the visual content industry has grown
substantially in recent years. The Company attributes this growth to several
factors, including:
- greater appreciation of the value of images for conveying, symbolizing and
reinforcing marketing and editorial messages;
- technological innovations, such as digitization and electronic commerce,
that have made it easier and cheaper to select, use, edit and distribute
images; and
- a proliferation in communications channels, particularly on the Internet
and in the broadcasting industry.
COMPETITIVE STRENGTHS AND STRATEGY
Getty Images' principal objective is to become the leading international
provider of visual content by providing high quality, relevant imagery across
all categories of the visual content market to the broadest range of customers
in existing, emerging and new markets, in ways that most appropriately meet
their needs. The Company has identified the following competitive strengths in
its existing operations that it believes differentiate it from other visual
content providers:
- the breadth and depth of its branded high-quality content across all
content categories;
- its leading position in electronic commerce within the visual content
industry and experience in the application and development of visual
content technology;
- its multifaceted licensing and distribution models, which provide its
customers a comprehensive range of options to meet their creative needs;
and
- its extensive international distribution network and electronic
distribution capabilities.
Getty Images believes that these strengths will allow it to take advantage
of both the increasing demand for visual content and the opportunities arising
in the rapidly changing visual content industry.
In order to achieve its objectives, Getty Images pursues the following core
strategies:
- EMPHASIZE CONTENT QUALITY AND RELEVANCE. Getty Images believes that
content quality and relevance are critical for long-term success in the
visual content industry. Getty Images focuses on identifying its
customers' needs throughout the creation, selection and production
processes to create high quality branded imagery relevant to the needs of
its customers in each geographic region and market.
- LEVERAGE TECHNOLOGICAL EXPERTISE. Getty Images continues to leverage its
technological expertise to make its content collections available in
digital formats and accessible on-line, which it believes will meet the
growing demand in electronic commerce, while enhancing its customers' and
its own operational efficiencies. In addition, the Company seeks to
develop and integrate new products, services and delivery mechanisms.
- DEVELOP NEW MARKETS, PRODUCTS AND CUSTOMER TYPES. Getty Images believes
that the increasing use of imagery in communications and the emergence of
advanced technologies has resulted in opportunities to develop products
and services targeted at emerging, potentially larger segments of the
market and to further penetrate existing market segments. Getty Images
believes that its expertise and systems, its range of licensing models and
its use of Web-based delivery make it well positioned to take a leadership
role in developing the potentially broader corporate user, small
office/home office ("SOHO") and consumer markets.
- OFFER COMPREHENSIVE RANGE OF BRANDED CUSTOMER SOLUTIONS. Getty Images
offers its customers a comprehensive range of options to meet their
commercial and creative needs, from full-service to self-service access,
from rights-protected licensing to royalty-free licensing, and from
physical delivery of transparencies to electronic delivery of digital
images.
5
<PAGE>
- PROMOTE AND IMPROVE BRAND IDENTITIES. Getty Images believes that Allsport,
Energy Film Library, Gamma Liaison, Hulton Getty, PhotoDisc and Tony Stone
Images represent pre-eminent brand names in their respective visual
content categories. Getty Images will continue to enhance the quality,
value and accessibility of its imagery to reinforce these international
brand identities and to create new brands in these and other visual
content categories.
- ENHANCE COMPREHENSIVE DISTRIBUTION NETWORK. Getty Images believes that it
has one of the most comprehensive distribution networks in the visual
content industry with the combination of its worldwide network of wholly
owned offices, agents and distributors and its on-line and Internet
distribution capabilities. In order to enlarge its available customer base
and further penetrate its existing customer base, Getty Images will
continue to strengthen its distribution capabilities by enhancing on-line
access to its visual content collections, by establishing wholly owned
offices in additional key territories and by developing agent and
distributor relationships in new markets.
- PURSUE STRATEGIC ACQUISITIONS. The visual content industry is fragmented
with a few international players, a number of regional players and a large
number of small businesses that specialize in a particular content type or
geographical area. Getty Images now owns content across all major
categories. However, it believes that the fragmented nature of the
industry continues to offer growth opportunities and it will target
companies that offer one or more of the following features: (i)
complementary visual content; (ii) a presence in a geographic market where
Getty Images is under-represented; and (iii) access to new technologies
and expertise.
COMPANY BACKGROUND
The Company was formed on February 9, 1998 when the businesses of Getty
Communications plc ("Getty Communications") and PhotoDisc, Inc. ("PhotoDisc")
were combined under a scheme of arrangement and merger pursuant to which Getty
Communications and PhotoDisc became wholly owned subsidiaries of the Company
(the "PhotoDisc Acquisition"). Getty Communications provided Getty Images with
an extensive international distribution network and high quality, branded
content collections, including Energy Film Library, Gamma Liaison, Hulton Getty
and Tony Stone Images. PhotoDisc contributed its brand name and expertise in the
digitization and electronic delivery of images over the Internet and its
royalty-free licensing model to Getty Images. Through this commercial
combination of high quality visual content and diverse delivery systems and
methods, Getty Images believes that it is well-positioned to satisfy the visual
content needs of existing, emerging and new market segments in the visual
content industry.
Getty Communications commenced operations on March 14, 1995 with the
acquisition of Tony Stone Images, the predecessor to Getty Communications and
one of the world's leading providers of contemporary stock photography. Between
March 14, 1995 and February 9, 1998, Getty Communications made a number of
acquisitions to broaden its content collections and expand its representation in
new and existing markets. On February 10, 1998, the Company completed its
acquisition (the "Allsport Acquisition") of Allsport Photographic plc
("Allsport").
The principal executive offices of Getty Images are located at 2101 Fourth
Avenue, Fifth Floor, Seattle, Washington 98121 (telephone number (206) 695-3400)
and at 101 Bayham Street, London England NW1 0AG (telephone number (01144171)
544-3456).
RISK FACTORS
An investment in the securities offered hereby involves certain risks. Prior
to making any investment decision, prospective purchasers of the securities
should carefully consider the information set forth under "Risk Factors" in
addition to the other information presented in this Prospectus.
6
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THE NOTES
<TABLE>
<S> <C>
SECURITIES OFFERED................ $75,000,000 aggregate principal amount of 4.75%
Convertible Subordinated Notes due June 1, 2003, issued
under an indenture (the "Indenture") between the Company
and The Bank of New York, as trustee (the "Trustee") and
the Common Stock issuable upon conversion thereof.
INTEREST PAYMENT DATES............ June 1 and December 1 of each year, commencing on
December 1, 1998.
MATURITY.......................... June 1, 2003
ISSUER............................ Getty Images, Inc., a Delaware corporation
CONVERSION RIGHTS................. The Registrable Notes are convertible into shares of
Common Stock at any time following the last date of the
initial issuance through maturity, unless previously
redeemed or repurchased, at a conversion price of
$28.5075 per share, subject to certain adjustments. See
"Description of Registrable Notes--Conversion of
Registrable Notes".
SUBORDINATION..................... The Registrable Notes are unsecured and subordinated in
right of payment to all existing and future Senior
Indebtedness (as defined) of the Company. The
Registrable Notes are also effectively subordinated in
right of payment to all existing and future indebtedness
and other liabilities (including trade payables and
excluding intercompany liabilities) of the Company's
subsidiaries. The Indenture will not restrict the
incurrence of Senior Indebtedness or other indebtedness
by the Company or any subsidiary. As of September 30,
1998, the aggregate amount of outstanding Senior
Indebtedness was approximately $1 million. As of
September 30, 1998, the aggregate amount of outstanding
indebtedness and other liabilities of the Company's
subsidiaries was approximately $61 million (including
trade payables and excluding intercompany liabilities
and Senior Indebtedness). See "Description of
Registrable Notes--Subordination of Registrable Notes".
OPTIONAL REDEMPTION............... The Registrable Notes are not redeemable by the Company
prior to June 1, 2001. Thereafter, the Registrable Notes
will be redeemable on at least 20 days' notice at the
option of the Company, in whole or in part, at the
redemption prices set forth herein, in each case
together with accrued and unpaid interest. See
"Description of Registrable Notes--Optional Redemption
by the Company".
REPURCHASE AT THE OPTION OF
HOLDERS UPON A CHANGE OF
CONTROL......................... Upon a Change in Control (as defined), each Holder of
Registrable Notes will have the right, subject to
certain conditions and restrictions, to require the
Company to purchase all or any part of such Holder's
Registrable Notes at 100% of the principal amount
thereof, plus accrued and unpaid interest. See
"Description of Registrable Notes--Repurchase of
Registrable Notes at the Option of Holders Upon a Change
of Control".
</TABLE>
7
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<TABLE>
<S> <C>
USE OF PROCEEDS................... The Company will not receive any of the proceeds from
the sale of the Registrable Notes or the Common Stock
issuable upon conversion thereof.
REGISTRATION RIGHTS AND LIQUIDATED
DAMAGES......................... Upon any failure by the Company to comply with certain
of its obligations under the Registration Agreement (as
defined herein), the Company will be required to pay
liquidated damages to the Holders of the Registrable
Notes or the Common Stock issuable upon conversion
thereof, as the case may be.
</TABLE>
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE
FOLLOWING FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING THE COMPANY AND
ITS BUSINESS BEFORE PURCHASING THE REGISTRABLE NOTES OFFERED HEREBY AND THE
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF. THIS PROSPECTUS
CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE
RESULTS REFLECTED IN THOSE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED BELOW AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS.
DEVELOPMENTAL NATURE OF THE VISUAL CONTENT INDUSTRY
The Company's future growth and profitability will depend in large measure
upon growth in demand for visual content. A visual content industry with
identifiable categories and growth characteristics is a relatively recent
development. The visual content industry is fragmented across all categories and
is experiencing significant structural and technological changes, including
substantial consolidation. To the extent that the visual content industry, or
any sector of that industry in which the Company operates, does not develop as
the Company anticipates, the value of the Company or its results of operations
or financial condition may be adversely affected.
RAPID TECHNOLOGICAL CHANGE
The success of Getty Images will depend, in part, upon its ability to adapt
to new technological developments in the visual content industry and to develop
new services and technology that address the increasingly sophisticated and
varied needs of its customers and prospective customers on a cost-effective and
timely basis. In response to technological changes, Getty Images has invested,
and will continue to invest, in new technologies to keep pace with new
developments, such as advances in producing digital images and in delivering
digital images on-line. Getty Images believes that market demand for images has
shifted and will continue to shift towards digital search, selection and
fulfillment of images, particularly in more developed markets. Getty Images will
rely on third parties for a substantial portion of the hardware, software and
software tools that it will use in its businesses, including, in particular, the
hardware, software and software tools that enable customers and potential
customers to access, search and license images through its Web sites. If
suppliers fail to upgrade or support such systems, the business, financial
condition or results of operations of Getty Images could be adversely affected.
There can be no assurance that Getty Images will successfully use new software
and other technologies effectively or adapt its third-party technology and
systems to customer requirements or emerging industry standards.
SIGNIFICANT COMPETITION
The visual content industry is characterized by strong competition. Getty
Images competes with a number of large and small visual content providers. Some
of the Company's competitors, including The Image Bank, Visual Communications
and Corbis, may have access to greater financial, marketing and other resources
than Getty Images. Getty Images also competes locally or with respect to certain
content or products with a number of general and specialized content companies,
many of which are well-established in their local or content or product specific
markets. Royalty-free stock photography agencies have also emerged as an
alternative to rights-protected stock photography businesses for applications
where rights-protection and other services are not customer requirements. In
addition, Getty Images competes indirectly with commissioned work in
contemporary stock photography and footage. New entrants into the visual content
industry could increase if technological advances make archiving, searching and
digital delivery systems more affordable, which could result in lower average
sales prices. There can be no assurance that Getty Images will be able to
compete successfully against current or future competitors or that competitive
pressures faced by Getty Images will not have a material adverse effect on the
business, financial condition or results of operations of Getty Images.
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<PAGE>
POTENTIAL DIFFICULTIES IN INTEGRATING OPERATIONS AND IN MANAGING GROWTH AND
EXPANSION
Getty Images was formed by the integration of several companies that have
previously operated independently. See "Summary--Company Background". The
process of coordinating and integrating these organizations will require
substantial attention from management and could cause the interruption of, or a
loss of momentum in, the activities of any of the companies' businesses, which
could have a material adverse effect on their combined operations, at least in
the near term. The diversion of management attention and any difficulties
encountered in the integration of the businesses could have a material adverse
effect on the revenues and operating results of Getty Images. Significant
goodwill amortization charges, one-time transaction costs and other related
one-time reorganization charges will also adversely affect the reported
operating results of Getty Images and may result in reported net income in
future periods being negative.
In addition, each of Getty Communications, PhotoDisc and Allsport has grown
rapidly in recent years. The ability of Getty Images to compete effectively and
to manage future growth, if any, will require Getty Images to monitor and
upgrade as appropriate its financial and management controls, to reorient
management of recently acquired businesses to the operating philosophy of Getty
Images, to develop and expand management information systems and to recruit and
train personnel. If Getty Images is unable to manage such recent growth and any
future growth and expansion successfully, its financial condition and results of
operations could be adversely affected.
RISKS RELATED TO GOODWILL RECOGNITION
The recent acquisitions of PhotoDisc and Allsport generated approximately
$239 million of goodwill and $51 million of other intangibles that will result
in a substantial annual charge to be amortized against the earnings of the
Company in future periods. Management considers that a period of twenty years is
a reasonable period over which to amortize this goodwill and that the other
intangibles should be amortized over one to three years. Getty Images could be
required to write-down the unamortized value of such goodwill in the future at
an accelerated rate in the event that it suffers an impairment in value. Future
acquisitions by the Company, if any, could generate goodwill and other
intangibles that would result in similar charges to be amortized against the
Company's future earnings.
INFLUENCE OF PRINCIPAL STOCKHOLDERS
Two groups of stockholders own substantial percentages of the outstanding
shares of Common Stock and as a result are in a position to exert significant
influence in the election of the directors of Getty Images and other corporate
actions that require stockholder approval. Getty Investments L.L.C., a Delaware
limited liability company ("Getty Investments"), Mr. Mark Getty, Mr. Jonathan
Klein, Crediton Limited (a company of which the sole beneficiary is Mr. Klein)
and the October 1993 Trust (a trust established by Mr. Getty) (collectively, the
"Getty Group") beneficially owned approximately 34% of the outstanding shares of
Common Stock and PDI, L.L.C., Mr. Mark Torrance, Ms. Wade Torrance and certain
of their family members (collectively, the "Torrance Group") beneficially owned
approximately 17% of the outstanding shares of Common Stock, in each case as of
September 30, 1998. Pursuant to the Stockholders' Agreement among the Company,
the Getty Group and the Torrance Group, none of the members of the Getty Group
or the Torrance Group may transfer such stockholder's shares of Common Stock
except pursuant to the terms of such agreement. In addition to ownership of
Common Stock, certain members of each of the Getty Group and the Torrance Group
have management roles with Getty Images that increase their influence over the
Company and certain members of each group also have other rights and
relationships with the Company.
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<PAGE>
DEPENDENCE UPON KEY PERSONNEL
Getty Images believes that its performance depends, to a significant extent,
upon the services of its senior management and other key personnel, including,
in particular, Mr. Mark Getty, Chairman of Getty Images and Mr. Jonathan Klein,
Chief Executive Officer of Getty Images. The loss of the services of any of
Messrs. Getty or Klein could materially adversely affect the future prospects of
the Company. Each of Messrs. Getty and Klein recently entered into an Employment
Agreement with Getty Images (or its subsidiaries) for a minimum period of three
years commencing as of February 9, 1998.
The future success of Getty Images will also depend upon its ability to
identify, attract, hire, train, retain and motivate highly skilled technical,
managerial, editorial, merchandising, marketing and customer service personnel.
Competition for such personnel is intense, and there can be no assurance that
Getty Images will be able to successfully attract, hire, assimilate or retain
sufficiently qualified personnel. The failure to retain and attract the
necessary technical, managerial, editorial, merchandising, marketing and
customer service personnel could have a material adverse effect on the business,
financial condition or results of operations of Getty Images.
RISKS RELATED TO ELECTRONIC IMAGE DELIVERY SYSTEMS
The Company's future growth in sales and profitability will depend in part
upon the increased acceptance and use of the Internet and other on-line services
as an effective medium of commerce. Rapid growth in the use of and interest in
the Internet, the Web and on-line services is a recent phenomenon, and there can
be no assurance that acceptance and use will continue to develop or that a
sufficiently broad base of users and prospective users of digital images will
adopt and continue to use such on-line services as a medium of commerce. In
addition, such on-line services may not be accepted as a viable commercial
marketplace for a number of reasons, including potentially inadequate
development of the necessary network infrastructure or delayed development of
enabling technologies and performance improvements.
A significant barrier to on-line commerce and communications is the secure
transmission of confidential information over public networks. Getty Images
relies on encryption and authentication technology licensed from third parties
to provide the security and authentication necessary to effect secure
transmission of confidential or proprietary information, such as customer credit
card numbers or digital images. There can be no assurance that advances in
computer capabilities or other events or developments will not result in a
compromise or breach of the algorithms used by Getty Images to protect customer
transaction data. Concerns over the security of the Internet and other on-line
transactions and the privacy of users may also inhibit the growth of the
Internet and other on-line services generally, and the Web in particular,
especially as a means of conducting commercial transactions. The success of the
on-line operations of Getty Images will also depend in part upon the efficient
and uninterrupted operation of its computer and communications hardware systems.
Such systems and operations are vulnerable to damage or interruption from fire,
flood, power loss, telecommunications failure, break-ins, earthquake and similar
events. While the Company has implemented disaster recovery plans, the Company
could suffer significant delays in implementing a backup system if a major
interruption were to occur. In addition, despite the implementation of network
security measures, the Company's servers are vulnerable to computer viruses,
physical or electronic break-ins and similar disruptions, which could lead to
interruptions, delays, loss of customer data or the inability to accept and
fulfill on-line customer orders.
IMPACT OF CHANGES IN FOREIGN EXCHANGE RATES
Getty Images publishes its consolidated financial statements in U.S. dollars
and conducts a portion of its business in currencies other than U.S. dollars,
particularly the pound sterling, German mark and French franc. As a result,
Getty Images is exposed to changes in the value of currencies against the U.S.
dollar. Fluctuations in the values of currencies against the U.S. dollar could
affect the translation of the results of
11
<PAGE>
non-U.S. based operations into U.S. dollars for inclusion in the consolidated
financial statements of Getty Images.
POTENTIAL LOSS OF RIGHTS TO GETTY TRADEMARKS
Getty Images (through its subsidiaries) owns trademarks and trademark
applications in respect of the names Getty Communications and Hulton Getty, and
derivatives thereof (including the name "Getty Images") and the related logo
(together, the "Getty Trademarks"). In the event that Getty Images becomes
controlled by a third party or parties not affiliated with the Getty family,
Getty Investments has the right to call for an assignment to it, for a nominal
sum, of all rights to the Getty Trademarks. Upon such assignment, Getty Images
will have 12 months in which it will be permitted to continue to use the Getty
Trademarks and thereafter will have to cease such use. Although the primary
brands used by Getty Images are Allsport, Energy Film Library, Gamma Liaison,
Hulton Getty, PhotoDisc and Tony Stone Images, Getty Images is used as a
corporate identity for certain of the Company's subsidiaries and Hulton Getty is
a Getty Trademark. There can be no assurance that the exercise by Getty
Investments of its right to cause an assignment of the Getty Trademarks would
not have a material adverse effect on the business, financial condition or
results of operations of Getty Images. Further, there can be no assurance that
the existence of the right of Getty Investments to cause such an assignment
would not have a negative impact on the amount of consideration that a potential
acquirer would be willing to pay to acquire the Common Stock.
RISKS RELATED TO GETTY IMAGES' ACQUISITION STRATEGY
Although Getty Images now owns visual content across all major categories,
the Company may in the future pursue the acquisition of complementary visual
content and other product lines, assets, distribution capabilities or
technologies that will complement or expand its business. Getty Images believes
that the recent increase in the level of demand for visual content and a trend
toward consolidation in the visual content industry, have increased the
valuations of visual content businesses and collections and are likely to have
an adverse impact on Getty Images' ability to make acquisitions and on its
ability to realize appropriate returns on such acquisitions. Acquisitions also
involve a number of other risks that could adversely affect the business,
financial condition or results of operations of Getty Images, including the
diversion of management's attention, the assimilation of the operations and
personnel of the acquired companies and the potential loss of key employees. No
assurance can be given that Getty Images will be able to identify any suitable
acquisition candidates or to make any acquisitions or that any acquisition by
Getty Images will not adversely affect the business, financial condition and
results of operations of Getty Images or that such acquisitions will enhance the
business of Getty Images.
SUBORDINATION
The Registrable Notes will be unsecured and subordinated in right of payment
in full to all existing and future Senior Indebtedness of the Company, including
the Company's revolving credit facility with Midland Bank plc. As a result of
such subordination, in the event of the Company's liquidation or insolvency, a
payment default with respect to Senior Indebtedness, a covenant default with
respect to Designated Senior Indebtedness (as defined) or upon acceleration of
the Registrable Notes due to an event of default, the assets of the Company will
be available to pay obligations on the Registrable Notes only after all Senior
Indebtedness has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Registrable Notes then
outstanding.
The Indenture does not prohibit or limit the incurrence of Senior
Indebtedness or the incurrence of other indebtedness and other liabilities by
the Company or its subsidiaries. As of September 30, 1998, the aggregate amount
of Senior Indebtedness was approximately $1 million. As of September 30, 1998,
the aggregate amount of outstanding indebtedness and other liabilities of the
Company's subsidiaries was approximately $61 million (including trade payables
and excluding intercompany liabilities and Senior
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<PAGE>
Indebtedness). The incurrence of additional indebtedness and other liabilities
by the Company or its subsidiaries could adversely affect the Company's ability
to pay its obligations on the Registrable Notes. The Company expects from time
to time to incur additional indebtedness and other liabilities including Senior
Indebtedness, and also expects that its subsidiaries will from time to time
incur additional indebtedness and other liabilities. See "Description of
Registrable Notes--Subordination of Registrable Notes."
RELIANCE ON OPERATIONS OF AND DIVIDENDS AND DISTRIBUTIONS FROM SUBSIDIARIES
The Company is a holding company without significant operations of its own
or significant assets other than ownership of the capital stock of its
subsidiaries, including PhotoDisc, Getty Communications and Allsport.
Accordingly, the Company's cash flow and the consequent ability to service debt,
including the Registrable Notes, are dependent on the earnings of its
subsidiaries and the distribution of these earnings to, or upon loans or other
payments of funds by those subsidiaries to, the Company. Several of the
Company's subsidiaries have their principal operations in a country other than
the United States, the country in which the Company is organized. Each such
subsidiary receives its revenues in the local currency of the country or
jurisdiction in which its is situated. As a consequence, the Company's ability
to obtain dividends or other distributions is subject to, among other things,
restrictions on dividends under applicable local laws and regulations, and
foreign currency exchange regulations of the country or jurisdiction in which
such subsidiaries operate. The subsidiaries' ability to pay dividends or make
other distributions to the Company is also subject to their having sufficient
funds from their operations legally available for the payment of such dividends
or distributions that are not needed to fund their operations, obligations or
other business plans. Because the Company is a stockholder of each of its
subsidiaries, the Company's claims as such will generally rank junior to all
other creditors of and claims against the subsidiaries. In the event of a
subsidiary's liquidation, there may not be assets sufficient for the Company to
recoup its investments in such subsidiary.
LIMITATIONS ON REPURCHASE OF REGISTRABLE NOTES
The Company's ability to repurchase Registrable Notes upon the occurrence of
a Change in Control is subject to limitations. There can be no assurance that
the Company would have the financial resources, or would be able to arrange
financing, to pay the repurchase price for all the Registrable Notes that might
be delivered by Holders of Registrable Notes seeking to exercise the repurchase
right. Moreover, the Company's ability to purchase Registrable Notes may be
limited or prohibited by the terms of then existing borrowing arrangements,
including Senior Indebtedness existing at the time of a Change in Control. The
Company's ability to repurchase Registrable Notes with cash may also be limited
by the terms of its subsidiaries' then existing borrowing arrangements due to
dividend restrictions. Any failure by the Company to repurchase the Registrable
Notes when required following a Change in Control would result in an Event of
Default under the Indenture whether or not such repurchase is permitted by the
subordination provisions of the Indenture. Any such default may, in turn, cause
a default under Senior Indebtedness of the Company. In addition, the Company's
repurchase of the Registrable Notes as a result of the occurrence of a Change in
Control may be prohibited or limited by, or create an event of default under,
the terms of agreements related to borrowings which the Company may enter into
from time to time, including agreements relating to Senior Indebtedness. See
"Description of Registrable Notes-- Repurchase of Registrable Notes at Option of
Holders Upon a Change in Control".
ABSENCE OF PUBLIC MARKET FOR THE REGISTRABLE NOTES
The Registrable Notes were issued in May of 1998 to a small number of
institutional buyers. The Registrable Notes issued and sold in reliance on Rule
144A under the Securities Act have been designated for trading on PORTAL. The
Registrable Notes sold pursuant to the Registration Statement of which this
Prospectus forms a part are not expected to remain eligible for trading on the
PORTAL. The Registration
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<PAGE>
Statement of which this Prospectus forms a part is filed pursuant to the
Registration Agreement, which does not obligate the Company to keep the
Registration Statement effective after the third anniversary of the date when
the Registration Statement is declared effective or, if earlier, the date when
all the Registrable Notes and the Common Stock issuable on conversion thereof
covered by the Registration Statement have been sold pursuant to the
Registration Statement or may be sold without registration by persons that are
not affiliates of Getty Images pursuant to Rule 144(k) under the Securities Act.
The Company does not intend to apply for listing of the Registrable Notes in any
securities exchange or to seek approval for quotation through any automated
quotation system. The Initial Purchasers have advised the Company that they
intend to make a market in the Registrable Notes. The Initial Purchasers are not
obligated however, to make a market in the Registrable Notes and any such market
making may be discontinued at any time in the sole discretion of the Initial
Purchasers without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the Registrable Notes. If a trading
market does not develop or is not maintained, Holders of Registrable Notes may
experience difficulty in reselling, or an inability to sell, the Registrable
Notes. Various factors such as changes in prevailing interest rates or changes
in perceptions of the Company's creditworthiness could cause the market price of
the Registrable Notes to fluctuate significantly. The trading price of the
Registrable Notes could also be significantly affected by the market price of
the Common Stock, which could be subject to wide fluctuations in response to a
variety of factors.
POSSIBLE VOLATILITY OF STOCK PRICE; FUTURE SALES OF SUBSTANTIAL NUMBERS OF GETTY
IMAGES SHARES COULD HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF GETTY IMAGES
SHARES
There has been significant volatility in the market for American Depositary
Shares of Getty Communications ("Getty Communications ADSs") and for the Common
Stock.
Sales, or the possibility of sales, of substantial numbers of shares of
Common Stock in the public market could adversely affect prevailing market
prices of shares of Common Stock. Certain stockholders of Getty Images have the
right, pursuant to various registration rights agreements, to request that Getty
Images register certain shares of Common Stock for resale under the Securities
Act. In addition, employees of Getty Images hold a significant number of options
to purchase shares of Common Stock, many of which are presently exercisable.
Many employees may exercise their options and sell shares shortly after such
options become exercisable, particularly if they need to raise funds to pay for
the exercise of such options or to satisfy tax liabilities that they may incur
in connection with exercising their share options.
YEAR 2000
In common with users of computers around the world, Getty Images is
investigating if and to what extent the date change from 1999 to 2000 may effect
its networks and systems. The Company has recently undertaken a year 2000
assessment of its systems and is developing a program to implement any necessary
system upgrades. The major business system within Tony Stone Images is currently
being redeveloped and will be implemented prior to the year 2000. PhotoDisc has
also recently redeveloped its business system. There can be no assurance that
these programs will be successful. In addition, although the Company believes
that significant modifications will not be required on other systems, there can
be no assurance that such modifications will not be required or that the date
change from 1999 to 2000 will not have a material adverse effect on the
Company's business, operating results and financial condition. The Company's
operations may also be affected by the ability of third parties dealing with the
Company to also manage the effect of the year 2000 date change.
ANTI-TAKEOVER CONSIDERATIONS
The Board of Directors of the Company has the authority, without stockholder
approval, to issue up to 5,000,000 shares of preferred stock and to fix the
rights, preferences, privileges and restrictions of such
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shares without any further vote or action by the stockholders of Getty Images.
This authority, together with certain provisions of the Amended and Restated
Certificate of Incorporation of Getty Images (the "Certificate of
Incorporation"), may have the effect of making it more difficult for a third
party to acquire, or discouraging a third party from attempting to acquire,
control of the Company, even if stockholders of the Company consider such change
in control to be in their best interests. In addition, the concentration of
beneficial ownership of Common Stock by the Getty Group and the Torrance Group
and certain provisions of Delaware law may have the effect of delaying,
deterring or preventing a hostile takeover of the Company.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
GETTY IMAGES, INC. AND GETTY COMMUNICATIONS PLC (PREDECESSOR)
--------------------------------------------------------------------
FISCAL YEAR ENDED DECEMBER 31, SIX MONTHS
----------------------------------------------------- ENDED
1993 1994 1995 1996 1997 JUNE 30, 1998
--------- --------- --------- --------- --------- -------------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges...................... 6.02 7.73 2.83 3.07 4.16 --
Deficiency of Earnings
to Fixed Charges................... (18,907)
</TABLE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Registrable
Notes or the Common Stock issuable upon conversion of thereof by the Selling
Holders.
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DESCRIPTION OF CAPITAL STOCK
SET FORTH BELOW IS A SUMMARY OF CERTAIN INFORMATION CONCERNING THE COMPANY'S
CAPITAL STOCK, AND A BRIEF DESCRIPTION OF CERTAIN PROVISIONS CONTAINED IN THE
CERTIFICATE OF INCORPORATION AND BYLAWS OF THE COMPANY AND THE DELAWARE GENERAL
CORPORATION LAW. THE SUMMARIES AND DESCRIPTIONS BELOW DO NOT PURPORT TO BE
COMPLETE STATEMENTS OF THESE PROVISIONS AND ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO THE DETAILED PROVISIONS THEREOF.
The authorized capital stock of the Company consists of 75,000,000 shares of
Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share
("Preferred Stock"). As of September 30, 1998, there were 30,512,519 shares of
Common Stock outstanding and no shares of Preferred Stock outstanding.
COMMON STOCK
The holders of shares of Common Stock are entitled to cast one vote for each
share held of record on all matters submitted to a vote of stockholders. Subject
to preferences that may be applicable to any outstanding shares of Preferred
Stock, holders of shares of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy". In the event of a liquidation,
dissolution or winding up of Getty Images, holders of shares of Common Stock are
entitled to share ratably in all assets of Getty Images remaining after payment
of liabilities and the liquidation preference of any outstanding Preferred
Stock. Holders of shares of Common Stock have no preemptive rights and have no
rights to convert their shares of Common Stock into any other securities. All
outstanding shares of Common Stock are fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors has the authority to issue up to 5,000,000 shares of
Preferred Stock in one or more series and to fix the designation, powers,
preferences and rights of the shares of each such series, including dividend
rights, dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series or the designation of such series, without any further vote or action
by the stockholders of Getty Images. The issuance of Preferred Stock in certain
circumstances may have the effect of delaying, deferring or preventing a change
in control of Getty Images, may discourage bids for shares of Common Stock at a
premium over the market price of the common stock and may adversely affect the
market price of, and the voting and other rights of the holders of, shares of
Common Stock. There are no shares of Preferred Stock outstanding and Getty
Images currently has no plans to issue any Preferred Stock.
CERTAIN ANTI-TAKEOVER PROVISIONS
DELAWARE ANTI-TAKEOVER STATUTE. Getty Images is a Delaware corporation and
subject to Section 203 of the Delaware General Corporation Law, an anti-takeover
law. In general, Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years following the date the person became an interested
stockholder, unless (with certain exceptions) the "business combination" or the
transaction in which the person became an interested stockholder is approved in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the stockholder. Generally, an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years prior, did
own) 15 percent or more of a corporation's voting stock. The existence of this
provision would be expected to have an anti-takeover effect with respect to
transactions not approved in advance by the Board of Directors, including
discouraging attempts that might result in a premium over the market price for
the shares of Common Stock held by stockholders.
CERTAIN CHARTER AND BYLAW PROVISIONS. The Certificate of Incorporation and
Bylaws of the Company divide the Board of Directors into three classes of
directors with each class serving a staggered three year
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term. Such classification may tend to discourage a third party from making a
tender offer or otherwise attempting to obtain control of the Company and may
maintain the incumbency of the Board of Directors.
LIMITATIONS ON DIRECTORS' LIABILITIES AND INDEMNIFICATION
Getty Images has adopted provisions in its Certificate of Incorporation that
eliminate the personal liability of its directors for monetary damages arising
from a breach of their fiduciary duties in certain circumstances to the fullest
extent permitted by law. Such limitation of liability does not apply to
liabilities arising under the federal securities laws, and does not affect the
availability of equitable remedies such as injunctive relief or rescission.
Getty Images' Bylaws provide that Getty Images will indemnify its directors
and officers to the fullest extent permitted by Delaware law, including
circumstances in which indemnification is otherwise discretionary under Delaware
law. Getty Images will enter into indemnification agreements providing for the
foregoing with its directors and officers. The indemnification agreements may
require Getty Images, among other things, to indemnify such officers and
directors against certain liabilities that may arise by reason of their status
or service as officers or directors (other than liabilities arising from willful
misconduct of a culpable nature) and to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified.
Getty Images has been advised that, in the opinion of the Commission,
indemnification of officers and directors for liabilities arising under the
Securities Act is against public policy and is therefore unenforceable.
REGISTRATION AND OTHER RIGHTS
Certain stockholders are entitled to piggyback or demand rights with respect
to the registration of their shares under the Securities Act. Certain
stockholders have entered into a stockholders' agreement restricting the
transfer of shares held by such stockholders and granting rights of first
refusal to the other parties thereto. In addition, certain stockholders have
entered into an agreement granting voting rights to their shares to Getty
Investments and granting rights of first refusal to the other parties thereto.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is The Bank of New
York.
DESCRIPTION OF REGISTRABLE NOTES
The Registrable Notes were issued under an indenture dated as of May 27,
1998 (the "Indenture"), between the Company and The Bank of New York, as Trustee
(the "Trustee"). A copy of the Registration Agreement is available from the
Trustee upon request by a registered Holder of Registrable Notes. The following
summaries of certain provisions of the Registrable Notes, the Indenture and the
Registration Agreement do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Registrable Notes, the Indenture and the Registration Agreement, including the
definitions therein of certain terms which are not otherwise defined in this
Prospectus. Wherever particular provisions or defined terms of the Indenture (or
of the form of Registrable Note which is a part thereof) or the Registration
Agreement are referred to, such provisions or defined terms are incorporated
herein by reference. As used in this section, the term "Company" refers only to
Getty Images, Inc., and not to any of its subsidiaries.
GENERAL
The Registrable Notes are general unsecured obligations of the Company,
subordinate in right of payment to certain other obligations of the Company as
described under "--Subordination of Registrable Notes", and convertible into
Common Stock as described under "--Conversion of Registrable Notes". The
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<PAGE>
Registrable Notes are limited to $75,000,000 in aggregate principal amount are
issued only in denominations of $1,000 or any multiple thereof and mature on
June 1, 2003, unless earlier redeemed at the option of the Company or
repurchased by the Company at the option of Holders upon a Change in Control or
converted into Common Stock by the Holders. See "--Optional Redemption by the
Company", "--Repurchase Registrable Notes at the Option of Holders Upon a Change
of Control" and "--Conversion of Registrable Notes".
The Indenture does not contain any financial covenants or any restrictions
on the payment of dividends, the incurrence of Senior Indebtedness or the
issuance or repurchase of securities of the Company. The Indenture contains no
covenants or other provisions to afford protection to Holders of Registrable
Notes in the event of a highly leveraged transaction or a Change of Control of
the Company except to the extent described under "--Repurchase of Registrable
Notes at the Option of Holders Upon a Change of Control".
The Registrable Notes bear interest from the date of initial issuance, at
the annual rate set forth on the cover page hereof, payable on June 1 and
December 1, commencing on December 1, 1998 (each, an "Interest Payment Date"),
to Holders of record at the close of business on the immediately preceding May
15 or November 15, respectively (each, a "Record Date"). Registrable Notes
called for redemption by the Company shall include accrued and unpaid interest
to, but excluding, the Redemption Date; provided that if the Redemption Date is
after a Record Date and on or prior to the corresponding Interest Payment Date,
accrued interest shall be payable to the Holder in whose name the redeemed
Registrable Notes are registered on the close of business on such Record Date.
Registrable Notes repurchased by the Company at the option of a Holder pursuant
to a Change of Control shall include accrued and unpaid interest and liquidated
damages, if any, to, but excluding, the Repurchase Date; provided that if the
Repurchase Date is after a Record Date and on or prior to the corresponding
Interest Payment Date, accrued interest and liquidated damages, if any, shall be
paid to the Holder in whose name the repurchased Registrable Notes are
registered on the close of business on such Record Date and no additional
interest or liquidated damages will be paid to a Holder who tenders a
Registrable Note pursuant to the Repurchase Offer. If a Registrable Note is
surrendered for conversion between a Record Date and the next following Interest
Payment Date and the Registrable Note has not been called for redemption on a
Redemption Date occurring within such period, then the surrender of such
Registrable Note shall be accompanied by a payment of an amount equal to the
interest and liquidated damages, if any, payable on such Interest Payment Date
on the principal amount of the Registrable Note being surrendered for
conversion. A Holder shall not be required to make such payment if the
Registrable Notes being converted are called for redemption during the period
from the Record Date preceding the date of conversion to the next Interest
Payment Date.
Principal of, premium, if any, interest on, and liquidated damages, if any,
with respect to, the Registrable Notes is payable, and the Registrable Notes may
be presented for conversion, registration of transfer and exchange at the office
of the Company maintained for such purpose in The City of New York, New York,
which shall initially be the office or agency of the Trustee. Principal,
premium, if any, interest and liquidated damages, if any, may, at the Company's
option, be paid at the Trustee's principal corporate trust office or by check
mailed to such Holders at the addresses set forth upon the registry books of the
Company. Interest is computed on the basis of a 360-day year comprised of twelve
30-day months.
The Registrable Notes are issued only in registered form, without coupons,
in denominations of $1,000 and integral multiples thereof. No service charge
will be made for any registration of transfer or exchange of Registrable Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
The Indenture and the Registration Agreement are governed by and construed
in accordance with the laws of the State of New York, without regard to
conflicts of laws principles thereof.
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<PAGE>
CONVERSION OF REGISTRABLE NOTES
Each Holder of Registrable Notes has the right at any time following the
latest date of initial issuance of the Registrable Notes and prior to the close
of business on the Stated Maturity of the Registrable Notes, unless previously
redeemed or repurchased, at the Holder's option, to convert any portion of the
principal amount thereof that is an integral multiple of $1,000 into shares of
Common Stock at any time at the Conversion Price set forth on the cover page of
this Prospectus (subject to adjustment as described below). The right to convert
a Registrable Note called for redemption or delivered for repurchase and not
withdrawn will terminate at the close of business on the Business Day
immediately prior to the Redemption Date or Repurchase Date for such Registrable
Note, unless the Company subsequently fails to pay the applicable Redemption
Price or Repurchase Price, as the case may be.
In the case of any Registrable Note that has been converted after any Record
Date, but on or before the next Interest Payment Date, interest and liquidated
damages, if any, the stated due date of which is on such Interest Payment Date,
shall be payable on such Interest Payment Date notwithstanding such conversion,
and such interest and liquidated damages, if any, shall be paid to the Holder in
whose name such converted Registrable Note is registered on the close of
business on such Record Date. Any Registrable Note surrendered for conversion
after any Record Date but before the next Interest Payment Date must be
accompanied by payment of an amount equal to the interest and liquidated
damages, if any, payable on such Interest Payment Date on the principal amount
of Registrable Notes being surrendered for conversion. A Holder shall not be
required to make such payment if the Registrable Notes being converted are
called for redemption during the period from the Record Date preceding the date
of conversion to the next Interest Payment Date. As a result of the foregoing
provisions, Holders that surrender Registrable Notes for conversion on a date
that is not an Interest Payment Date will not receive any interest or liquidated
damages for the period from the Interest Payment Date next preceding the date of
conversion to the date of conversion or for any later period unless such
Registrable Notes have been called for redemption during the period from the
Record Date preceding the date of conversion to the next Interest Payment Date,
in which case the Holder on the close of business on the Record Date will
receive interest and liquidated damages, if any, thereon to the applicable
Redemption Date. No fractional shares will be issued upon conversion but, in
lieu thereof, an appropriate amount will be paid in cash by the Company based on
the market price of Common Stock (determined in accordance with the Indenture)
at the close of business on the day of conversion.
The Conversion Price is subject to adjustment in certain events, including
(a) any payment of a dividend (or other distribution) payable in Common Stock on
any class of Capital Stock of the Company, (b) any issuance to all holders of
Common Stock of rights, options or warrants entitling them to subscribe for or
purchase Common Stock at less than the then current market price of Common Stock
(determined in accordance with the Indenture), (c) certain subdivisions,
combinations or reclassifications of Common Stock, (d) any distribution to all
holders of Common Stock of the Company's assets, evidences of indebtedness, cash
or securities (other than dividends or distributions exclusively in cash, or for
which an adjustment is required to be made in accordance with (a) or (b) above,
or any distribution of rights or warrants pro rata to holders of Common Stock,
so long as any such rights or warrants have not expired or been redeemed by the
Company), (e) any distribution consisting exclusively of cash (excluding any
cash portion of distributions referred to in (d) above, or cash distributed upon
a merger or consolidation to which the third succeeding paragraph applies) to
all holders of Common Stock in an aggregate amount that, combined together with
(i) all other such all-cash distributions made within the then preceding 12
months in respect of which no adjustment has been made and (ii) any cash and the
fair market value of other consideration paid or payable in respect of any
tender or exchange offer by the Company or any of its subsidiaries for Common
Stock concluded within the preceding 12 months in respect of which no adjustment
has been made, exceeds 10% of the Company's market capitalization (defined as
being the product of the then current market price of the Common Stock times the
number of shares of Common Stock then outstanding) on the record date of such
distribution, and (f) the completion of a tender or
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<PAGE>
exchange offer made by the Company or any of its subsidiaries for Common Stock
that involves an aggregate consideration that, together with (i) any cash and
other consideration payable in a tender or exchange offer by the Company or any
of its subsidiaries for Common Stock expiring within the 12 months preceding the
expiration of such tender or exchange offer in respect of which no adjustment
has been made and (ii) the aggregate amount of any such all-cash distributions
referred to in (e) above to all holders of Common Stock within the 12 months
preceding the expiration of such tender or exchange offer in respect of which no
adjustments have been made, exceeds 10% of the Company's market capitalization
on the expiration of such tender offer. No adjustment of the Conversion Price
will be required to be made until the cumulative adjustments amount to 1% or
more of the Conversion Price as last adjusted.
In the event of a taxable distribution to holders of Common Stock (or other
transaction) which results in any adjustment of the Conversion Price, the
Holders of Registrable Notes may, in certain circumstances, be deemed to have
received a distribution subject to United States federal income tax as a
dividend; in certain other circumstances, the absence of such an adjustment may
result in a taxable dividend to the holders of Common Stock.
The Company, from time to time and to the extent permitted by law, may
reduce the Conversion Price by any amount for any period of at least 20 Business
Days, in which case the Company shall give at least 15 days' notice of such
reduction, if the Board of Directors has made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in the
Conversion Price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for United States federal
income tax purposes. See "Certain U.S. Federal Income Tax Considerations".
Subject to the rights of Holders of Registrable Notes described below under
"Repurchase of Registrable Notes at the Option of Holders Upon a Change of
Control," in case of any consolidation or merger of the Company with or into
another Person or any merger of another Person with or into the Company (with
certain exceptions), or in case of any sale, transfer or conveyance of all or
substantially all of the assets of the Company, each Registrable Note then
outstanding will, without the consent of any Holder of Registrable Notes, become
convertible only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale, transfer or conveyance by a
holder of the number of shares of Common Stock into which such Registrable Note
was convertible immediately prior thereto, after giving effect to any adjustment
event, who failed to exercise any rights of election and received per share the
kind and amount received per share by a plurality of non-electing shares.
The Company will cause all registrations with, and will obtain any approvals
by, any governmental authority under any Federal or state law of the United
States that may be required in connection with the conversion of the Registrable
Notes into Common Stock. If at any time during the two-year period following the
latest date of the Original Offering a registration statement under the
Securities Act covering the shares of Common Stock issuable upon conversion of
the Registrable Notes is not effective or is otherwise unavailable for effecting
resales of such shares, shares of Common Stock issued upon conversion of the
Registrable Notes ("Restricted Shares") may not be sold or otherwise transferred
except in accordance with or pursuant to an exemption from, or otherwise in a
transaction not subject to, the registration requirements of the Securities Act
and, if a registration statement under the Securities Act is not effective or is
otherwise unavailable for effecting resales of such shares at the time of a
conversion, the Restricted Shares will bear a legend to that effect. The
Transfer Agent for the Common Stock will not be required to accept for
registration or transfer any Restricted Shares, except upon presentation of
satisfactory evidence that these restrictions on transfer have been complied
with, all in accordance with such reasonable regulations as the Company may from
time to time agree with the Transfer Agent. Under certain circumstances, the
holders of the Restricted Shares will be entitled to liquidated damages during
such period. See "--Registration Rights".
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<PAGE>
SUBORDINATION OF REGISTRABLE NOTES
The Registrable Notes are general unsecured obligations of the Company,
subordinate in right of payment, to the extent set forth in the Indenture, to
all existing and future Senior Indebtedness of the Company. The Registration
Notes are structurally subordinated in right of payment to all liabilities
(including trade payables) of the Company's subsidiaries. As of September 30,
1998, the Company had approximately $1 million of indebtedness and other
liabilities that constituted Senior Indebtedness. As of September 30, 1998, the
Company's subsidiaries had approximately $61 million of outstanding indebtedness
and other liabilities (including trade payables and excluding intercompany
liabilities and Senior Indebtedness). The Indenture will not restrict the
incurrence of Senior Indebtedness or other indebtedness or liabilities by the
Company or its subsidiaries, or the ability of the Company to transfer assets or
business operations to its subsidiaries, subject to the provisions described
under "--Repurchase of Registrable Notes at the Option of Holders Upon a Change
of Control" and "--Limitation on Merger, Sale or Consolidation" below.
The Indenture provides that no payment may be made by the Company on account
of the principal of, premium, if any, interest on, or liquidated damages, if
any, with respect to, the Registrable Notes, or to acquire any of the
Registrable Notes (including repurchases of Registrable Notes at the option of
the Holder) for cash or property (other than pursuant to the conversion of
Registrable Notes), or on account of the redemption provisions of the
Registrable Notes, (i) upon the maturity of any Senior Indebtedness of the
Company by lapse of time, acceleration (unless waived) or otherwise, unless and
until all principal of, premium, if any, and interest on such Senior
Indebtedness are first paid in full (or such payment is duly provided for), or
(ii) in the event of default in the payment of any principal of, premium, if
any, or interest on any Senior Indebtedness of the Company when it becomes due
and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (a "Payment Default"), unless and until such Payment
Default has been cured or waived or otherwise has ceased to exist.
Upon (i) the happening of an event of default (other than a Payment Default)
that permits, or would permit with (a) the passage of time, (b) the giving of
notice, (c) the making of any payment of the Registrable Notes then required to
be made or (d) any combination thereof (collectively, a "Non-Payment Default"),
the holders of Designated Senior Indebtedness or their representative
immediately to accelerate its maturity and (ii) written notice of such
Non-Payment Default given to the Company and the Trustee by the holders of such
Designated Senior Indebtedness or their representative (a "Payment Blockage
Notice"), then, unless and until such Non-Payment Default has been cured or
waived or otherwise has ceased to exist, no payment (by setoff or otherwise) may
be made by or on behalf of the Company on account of the principal of, premium,
if any, interest on, or liquidated damages, if any, with respect to, the
Registrable Notes, or to acquire or repurchase any of the Registrable Notes for
cash or property, or on account of the redemption provisions of the Registrable
Notes, in any such case other than payments made with Junior Securities.
Notwithstanding the foregoing, unless (i) the Senior Indebtedness in respect of
which such Non-Payment Default exists has been declared due and payable in its
entirety within 179 days after the Payment Blockage Notice is delivered as set
forth above (the "Payment Blockage Period"), and (ii) such declaration has not
been rescinded or waived, at the end of the Payment Blockage Period, the Company
shall be required to pay all sums not paid to the Holders of the Registrable
Notes during the Payment Blockage Period due to the foregoing prohibitions and
to resume all other payments as and when due on the Registrable Notes. Not more
than one Payment Blockage Notice may be given in any consecutive 365-day period,
irrespective of the number of defaults with respect to Senior Indebtedness
during such period. In no event, however, may the total number of days during
which any Payment Blockage Period or Payment Blockage Periods are in effect
exceed 179 days in the aggregate during any consecutive 365-day period.
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<PAGE>
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than pursuant to the conversion of
Registrable Notes) shall be received by the Trustee or the Holders at a time
when such payment or distribution is prohibited by the foregoing provisions,
such payment or distribution shall be held in trust for the benefit of the
holders of Senior Indebtedness of the Company, and shall be paid or delivered by
the Trustee or such Holders, as the case may be, to the holders of the Senior
Indebtedness of the Company remaining unpaid or unprovided for or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness of the Company may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness of the
Company held or represented by each, for application to the payment of all
Senior Indebtedness of the Company remaining unpaid, to the extent necessary to
pay or to provide for the payment of all such Senior Indebtedness in full after
giving effect to any concurrent payment or distribution, or provision therefor,
to the holders of such Senior Indebtedness.
Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar
proceeding or upon assignment for the benefit of creditors or any marshaling of
assets or liabilities (i) the Holders of all Senior Indebtedness of the Company
will first be entitled to receive payment in full (or have such payment duly
provided for) before the Holders are entitled to receive any payment on account
of the principal of, premium, if any, interest on, and liquidated damages, if
any, with respect to, the Registrable Notes (other than Junior Securities) and
(ii) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by setoff or otherwise), except for the subordination provisions
contained in the Indenture, will be paid by the liquidating trustee or agent or
other person making such a payment or distribution directly to the Holders of
Senior Indebtedness of the Company or their representative to the extent
necessary to make payment in full of all such Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution, or
provision therefor, to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Registrable Notes affects the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, interest on, and liquidated damages, if any,
with respect to, the Registrable Notes. The subordination provisions of the
Indenture and the Registrable Notes does not prevent the occurrence of any
Default or Event of Default under the Indenture or limit the rights of the
Trustee or any Holder, subject to the preceding paragraphs, to pursue any other
rights or remedies with respect to the Registrable Notes.
As a result of these subordination provisions, in the event of the
insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up
of the business of the Company, the assets of the Company will be available to
pay the amounts due on the Registrable Notes only after all Senior Indebtedness
has been paid in full and, therefore, there may not be sufficient assets
remaining to pay amounts due on any or all of the Registrable Notes outstanding.
The Company's ability to meet its cash obligations in the future will be
dependent upon the ability of its subsidiaries to make cash distributions to the
Company. The ability of its subsidiaries to make distributions to the Company is
and will continue to be restricted by, among other limitations, applicable
provisions of law and contractual provisions. The Indenture does not limit the
ability of the Company's subsidiaries to incur such restrictions in the future.
The right of the Company to participate in the assets of any subsidiary (and
thus the ability of Holders of the Registrable Notes to benefit indirectly from
such assets) is generally subject to the prior claims of creditors, including
trade creditors, of that subsidiary except to the extent that the Company is
recognized as a creditor of such subsidiary, in which case the Company's claims
would still be subject to any security interest of other creditors of such
subsidiary. The Registrable Notes, therefore, will be structurally subordinated
to creditors, including trade creditors, of
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<PAGE>
subsidiaries of the Company with respect to the assets of the subsidiaries
against which such creditors have a claim.
OPTIONAL REDEMPTION BY THE COMPANY
The Registrable Notes are not subject to redemption prior to June 1, 2001,
and are redeemable thereafter at the option of the Company, in whole or in part,
upon not less than 20 days' notice to each Holder, at the following redemption
prices (expressed as percentages of the principal amount) if redeemed during the
12-month period commencing June 1 of the years indicated below, in each case
(subject to the right of Holders of record on a Record Date to receive interest
due on an Interest Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest and liquidated damages, if any, to,
but excluding, the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2001.............................................................................. 101.90%
2002.............................................................................. 100.95
2003.............................................................................. 100.00
</TABLE>
In the case of a partial redemption, the Trustee shall select the
Registrable Notes or portions hereof for redemption on a pro rata basis, by lot
or in such other manner it deems fair and appropriate and in such manner as
complies with any applicable depositary, legal and stock exchange or automatic
quotation system requirement. The Registrable Notes may be redeemed in part in
multiples of $1,000 only.
The Registrable Notes do not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first-class mail, at least 20 days
prior to the date fixed for redemption, to the Holder of each Registrable Note
to be redeemed to such Holder's last address as then shown upon the registry
books of the Registrar. The notice of redemption must state the Redemption Date,
the Redemption Price and the amount of accrued interest and liquidated damages,
if any, to be paid. Any notice that relates to a Registrable Note to be redeemed
in part only must state the portion of the principal amount equal to the
unredeemed portion thereof and must state that on and after the Redemption Date,
upon surrender of such Registrable Note, a new Registrable Note or Registrable
Notes in principal amount equal to the unredeemed portion thereof will be
issued. On and after the Redemption Date, interest will cease to accrue on the
Registrable Notes or portions thereof called for redemption, unless the Company
defaults in its obligations with respect thereto.
REPURCHASE OF REGISTRABLE NOTES AT THE OPTION OF HOLDERS UPON A CHANGE OF
CONTROL
The Indenture provides that in the event that a Change of Control has
occurred, each Holder of Registrable Notes has the right, at such Holder's
option, to require the Company to offer (the "Repurchase Offer") to repurchase
all or any part of such Holder's Registrable Notes (provided that the principal
amount of such Registrable Notes must be at least $1,000 or an integral multiple
thereof) on the date (the "Repurchase Date") that is no later then 40 Business
Days after the occurrence of such Change of Control at a cash price (the
"Repurchase Price") equal to 100% of the principal amount thereof, together with
accrued and unpaid interest and liquidated damages, if any, to (but excluding)
the Repurchase Date. The Company may, at its option (subject to certain
conditions), in lieu of paying the Repurchase Price in cash, pay the Repurchase
Price (but not accrued interest or liquidated damages, if any) in Common Stock
valued at 95% of the last sale price of the Common Stock for the five trading
days immediately preceding the second trading day prior to the Repurchase Date.
The Repurchase Offer shall be made within 20 Business Days following a Change of
Control and shall remain open for 20 Business Days following its commencement
except to the extent that a longer period is required by applicable law (the
"Repurchase Offer Period"). Upon expiration of the Repurchase Offer Period, the
Company shall purchase all Registrable Notes properly tendered in response to
the Repurchase Offer. If required by applicable law, the
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<PAGE>
Repurchase Date and the Repurchase Offer Period may be extended as so required;
however, if so extended, it shall nevertheless constitute an Event of Default if
the Repurchase Date does not occur within 70 Business Days of the Change of
Control.
On or before the Repurchase Date, the Company will (i) accept for purchase
Registrable Notes or portions thereof properly tendered pursuant to the
Repurchase Offer, (ii) deposit with the Paying Agent cash and/or Common Stock
sufficient to pay the Repurchase Price (together with cash sufficient to pay all
accrued and unpaid interest and liquidated damages, if any) of all Registrable
Notes so tendered and (iii) deliver to the Trustee the Registrable Notes so
accepted, together with an Officers' Certificate listing the Registrable Notes
or portions thereof being purchased by the Company. The Paying Agent will
promptly mail to the Holders of Registrable Notes so accepted payment in cash or
Common Stock in an amount equal to the Repurchase Price (together with cash
equal to accrued and unpaid interest and liquidated damages, if any), and the
Trustee will promptly authenticate and mail or deliver to such Holders a new
Registrable Note or Registrable Notes equal in principal amount to any
unpurchased portion of the Registrable Notes surrendered. Any Registrable Notes
not so accepted will be promptly mailed or delivered by the Company to the
Holder thereof. The Company will publicly announce the results of the Repurchase
Offer on or as soon as practicable after the Repurchase Date.
The phrase "all or substantially all" of the assets of the Company, as
included in the definition of Change of Control, is likely to be interpreted by
reference to applicable state law at the relevant time, and will be dependent on
the facts and circumstances existing at such time. As a result, there may be a
degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company has occurred.
The Change of Control purchase feature of the Registrable Notes may make
more difficult or discourage a takeover of the Company and the removal of
incumbent management. The Change of Control purchase feature is not the result
of management's knowledge of any specific effort to accumulate shares of Common
Stock or to obtain control of the Company by means of a merger, tender offer,
solicitation or otherwise, nor is the Change of Control purchase feature part of
a plan by management to adopt a series of anti-takeover provisions. Instead, the
Change of Control purchase feature resulted from negotiations between the
Company and the Initial Purchasers.
The provisions of the Indenture relating to a Change of Control may not
afford the Holders protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger, spin-off or similar transaction that may
adversely affect Holders, if such transaction does not constitute a Change of
Control. Moreover, certain events with respect to the Company which may involve
an actual change of control of the Company may not constitute a Change of
Control for purposes of the Indenture.
Upon the occurrence of a Change of Control, each Holder of Registrable Notes
may require the Company to repurchase all or a portion of such Holder's
Registrable Notes. If a Change of Control were to occur, there can be no
assurance that the Company would have sufficient financial resources, or would
be able to arrange financing, to pay the repurchase price for all Registrable
Notes tendered by Holders thereof. In addition, the Company's repurchase of the
Registrable Notes as a result of a Change of Control may be prohibited or
limited by, or create an event of default under, the terms of agreements related
to borrowings which the Company or its subsidiaries may enter into from time to
time. Failure of the Company to purchase tendered Registrable Notes would
constitute an Event of Default under the Indenture. See "--Events of Default and
Remedies". Failure of the Company to purchase tendered Registrable Notes may
also give rise to an event of default under the terms of Indebtedness of the
Company and its subsidiaries, which may result in subordination of the
Registrable Notes.
See "-- Subordination of Registrable Notes." The occurrence of a Change of
Control may also give rise to a repurchase or repayment obligation under the
terms of Senior Indebtedness and Indebtedness of subsidiaries of the Company.
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<PAGE>
Except as described herein, no modification of the Indenture regarding the
provisions on repurchase at the option of any Holder of a Registrable Note upon
a Change of Control is permissible without the consent of the Holder of the
Registrable Note so affected.
The Company will comply with the provisions of Rule 13e-4 and Rule 14e-1
under the Exchange Act, will file Schedule 13E-4 or any successor or similar
schedule required thereunder, and will otherwise comply with all federal and
state securities laws to the extent applicable to any Repurchase Offer.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company may not, directly or indirectly,
consolidate with or merge with or into another Person or sell, lease, convey or
transfer all or substantially all of its assets (other than to its wholly-owned
subsidiaries), whether in a single transaction or a series of related
transactions, to another Person or group of affiliated Persons, unless (i)
either (a) in the case of a merger or consolidation, the Company is the
surviving entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States (including any state
thereof or the District of Columbia), Canada or any other country that is a
member of the European Union; provided that with respect to any corporation
organized under the laws of any European Union country other than the United
Kingdom, such corporation must be listed on the New York Stock Exchange or the
American Stock Exchange or quoted on the Nasdaq National Market, and expressly
assumes by supplemental indenture all of the obligations of the Company in
connection with the Registrable Notes and the Indenture; (ii) no Default or
Event of Default shall exist or shall occur immediately after giving effect to
such transaction; and (iii) the Company has delivered to the Trustee an
Officer's Certificate and an opinion of counsel, each stating that such
consolidation, merger or transfer and if a supplemental indenture is required,
such supplemental indenture, comply with the Indenture and that all conditions
precedent relating to such transactions have been satisfied.
Upon any consolidation or merger or any sale, lease, conveyance or transfer
of all or substantially all of the assets of the Company in accordance with the
foregoing, the successor corporation formed by such consolidation or into which
the Company is merged or to which such sale, lease, conveyance or transfer is
made, shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture with the same effect as if such
successor corporation had been named therein as the Company, and when a
successor corporation duly assumes all of the obligations of the Company
pursuant to the Indenture and the Registrable Notes, the Company will be
released from its obligations under the Indenture and the Registrable Notes,
except as to any obligations that arise from or as a result of such transaction.
REPORTS
The Company has agreed that, if it is not subject to the informational
reporting requirements of Sections 13 or 15(d) of the Exchange Act at any time
while the Registrable Notes or the Common Stock issuable upon conversion thereof
constitute "restricted securities" within the meaning of the Securities Act, it
will furnish to the Trustee and to holders and beneficial owners of the
Registrable Notes and such Common Stock, and to prospective purchasers
designated by the Initial Purchasers or such holders, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to permit
compliance with Rule 144A in connection with resales of the Registrable Notes
and such Common Stock.
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the Company
to pay any installment of interest on, or liquidated damages, if any, with
respect to, the Registrable Notes as and when due and payable and the
continuance of any such failure for 30 days, (ii) the failure by the Company to
pay all or any part of the principal of, or premium, if any, on the Registrable
Notes when and as the same become
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due and payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, pursuant to any Repurchase Offer or otherwise,
(iii) the failure of the Company to perform any conversion of Registrable Notes
required under the Indenture and the continuance of any such failure for 30
days, (iv) the failure by the Company to observe or perform any other covenant
or agreement contained in the Registrable Notes or the Indenture and, subject to
certain exceptions, the continuance of such failure for a period of 60 days
after written notice is given to the Company by the Trustee or the Company and
the Trustee by Holders of at least 25% in aggregate principal amount of the
Registrable Notes outstanding, (v) certain events of bankruptcy, insolvency or
reorganization in respect of the Company or any of its Significant Subsidiaries
(as defined), (vi) any Indebtedness of the Company or any Significant Subsidiary
in a principal amount then outstanding in excess of $10 million is not paid at
final maturity thereof (either at its stated maturity or upon acceleration
thereof), and such Indebtedness is not discharged, or such acceleration is not
rescinded or annulled, within a period of 30 days after notice as provided in
the Indenture and (vii) final unsatisfied judgments not covered by insurance
aggregating in excess of $10 million, at any one time rendered against the
Company or any of its Significant Subsidiaries and not stayed, bonded or
discharged within 60 days.
The Indenture provides that if a default (the term "default" to include the
events specified above without grace or notice) occurs and is continuing and if
it is known to the Trustee, the Trustee must, within 90 days after the
occurrence of such default, give to the Holders notice of such default, but the
Trustee shall be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the best interest of the
Holders, except in the case of a default in the payment of the principal of,
premium, if any, or interest on or liquidated damages, if any, with respect to,
any of the Registrable Notes when due or in the payment of any redemption or
repurchase obligation.
The Indenture provides that if an Event of Default occurs and is continuing
(other than an Event of Default specified in clause (v) above with respect to
the Company), then in every such case, unless the principal of all of the
Registrable Notes shall have already become due and payable, either the Trustee
or the Holders of 25% in aggregate principal amount of the Registrable Notes
then outstanding, by notice in writing to the Company (and to the Trustee if
given by Holders) (an "Acceleration Notice"), may declare all principal and
accrued interest and liquidated damages, if any, thereon to be due and payable
immediately. If an Event of Default specified in clause (v) above with respect
to the Company occurs, all principal and accrued interest and liquidated
damages, if any, will be immediately due and payable on all outstanding
Registrable Notes without any declaration or other act on the part of the
Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of Registrable Notes generally are authorized to rescind such
acceleration if all existing Events of Default, other than the non-payment of
the principal of, premium, if any, and interest on, and liquidated damages, if
any, with respect to, the Registrable Notes that have become due solely by such
acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Registrable
Notes, the Holders of a majority in principal amount of the Registrable Notes at
the time outstanding may waive on behalf of all the Holders any default, except
a default in the payment of principal of or interest on, or liquidated damages,
if any, with respect to, any Registrable Note not yet cured, or a default with
respect to any covenant or provision that cannot be modified or amended without
the consent of the Holder of each outstanding Registrable Note affected. Subject
to the provisions of the Indenture relating to the duties of the Trustee, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request, order or direction of any of the Holders,
unless such Holders have furnished to the Trustee security or indemnity
satisfactory to it. Subject to all provisions of the Indenture and applicable
law, the Holders of a majority in aggregate principal amount of the Registrable
Notes at the time outstanding will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee.
The Indenture provides that no Holder may pursue any remedy under the
Indenture, except for a default in the payment of principal of, premium, if any,
interest on or liquidated damages, if any, with
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respect to, the Registrable Notes, and except for a failure to convert any
Registrable Note, unless the Holder gives to the Trustee written notice of a
continuing Event of Default, the Holders of at least 25% in principal amount of
the outstanding Registrable Notes make a written request to the Trustee to
pursue the remedy, such Holders furnish to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense, the Trustee does not comply
with the request within 60 days after receipt of the request and the furnishing
of indemnity satisfactory to it, and the Trustee shall not have received a
contrary direction from the Holders of a majority in principal amount of the
outstanding Registrable Notes.
AMENDMENT AND WAIVER
The Indenture contains provisions permitting the Company and the Trustee to
enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Registrable Notes at the time
outstanding, the Company and the Trustee are permitted to amend or supplement
the Indenture or any supplemental indenture or modify the rights of the Holders;
provided that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity of, or any installment of
interest on, or liquidated damages, if any, with respect to, any Registrable
Note or reduce the principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the coin or currency in which, any
Registrable Note or any premium or the interest thereon is payable, or impair
the right to institute suit for the conversion of any Registrable Note or the
enforcement of any such payment on or after the due date thereof (including, in
the case of redemption, on or after the Redemption Date), or reduce the
Repurchase Price, or alter the Repurchase Offer (other than as set forth herein)
or redemption provisions in a manner adverse to the Holders, or modify the
subordination provisions in a manner adverse to the Holders of the Registrable
Notes, (ii) reduce the percentage in principal amount of the outstanding
Registrable Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the Indenture, (iii)
adversely affect the right of such Holder to convert Registrable Notes, or (iv)
provide that other provisions of the Indenture cannot be modified or waived
without the consent of the Holder of each outstanding Registrable Note affected
thereby. A supplemental indenture entered into in compliance with the
"Limitation on Merger, Sale or Consolidation" covenant would not require the
consent of the Holders.
The Holders of a majority in principal amount of the outstanding Registrable
Notes may (a) waive compliance in a particular instance by the Company with
certain restrictive provisions of the Indenture or the Registrable Notes or (b)
waive any past default or Event of Default under the Indenture and its
consequences, except (i) a default in the payment of interest, liquidated
damages, if any, or premium, if any, on, or the principal of, the Registrable
Notes, (ii) a failure by the Company to convert any Registrable Notes into
Common Stock, (iii) a default in the payment of the Redemption Price or
Repurchase Price or (iv) a default in respect of a covenant or provisions which
require the consent of the Holders of all Registrable Notes then outstanding to
amend.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Registrable Notes in accordance with
the Indenture. The Company or Trustee may require a Holder, among other things,
to furnish appropriate endorsements, legal opinions and transfer documents, and
to pay any taxes and fees required by law or permitted by the Indenture. The
Company is not required to transfer or exchange any Registrable Notes selected
for redemption. Also, the Company is not required to transfer or exchange any
Registrable Notes for a period of 15 days before (i) the mailing of a notice of
an offer to repurchase as a result of a Change of Control or (ii) the mailing of
a notice of redemption of Registrable Notes to be redeemed.
The registered holder of a Registrable Note may be treated as the owner of
it for all purposes.
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BOOK ENTRY, DELIVERY AND FORM
Upon the initial sale of Registrable Notes offered hereby, each Selling
Holder will be required to deliver a notice ("Notice") of such sale to the
Trustee and the Company. The Notice will, among other things, identify the sale
as a transfer pursuant to the Registration Statement of which this Prospectus
forms a part, certify that the prospectus delivery requirements, if any, of the
Securities Act have been satisfied, and certify that the Selling Holder and the
aggregate principal amount of Notes owned by such holder are identified in the
Prospectus in accordance with the applicable rules and regulations under the
Securities Act. Copies may be requested from the Company, 2101 Fourth Avenue,
Fifth Floor, Seattle, Washington 98121, Attention: Heather B. Redman, telephone:
(206) 695-3400.
Upon the initial transfer pursuant to the Registration Statement of which
this Prospectus forms a part, the Registrable Notes will be issued by one or
more global notes (the "Global Notes") fully registered form, without coupons,
in denominations of $1,000 principal amount and integral multiples thereof. Each
such Global Note will be deposited with, or on behalf of The Depository Trust
Company (the "DTC") and registered in the name Cede & Co. ("Cede"), as DTC's
nominee. Except as set forth below, record ownership the Global Note may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
Payment of interest on and the redemption price of the Global Note will be
made to Cede, the nominee of DTC, as the registered owner of the Global Note, by
wire transfer of immediately available funds on the applicable payment date
therefor. Neither the Company, the Trustee nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securities for its
participant organizations (collectively, the "Participants"). DTC also
facilitates the clearance and settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic book-entry changes to accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations such as the Initial Purchasers.
Certain of such Participants (or their representatives), together with other
entities, own DTC. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through, or maintain a
custodial relationship, with, a Participant, either directly or indirectly
(collectively, the "Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
The Company has been informed by DTC that, with respect to any payment of
interest on, or the redemption price of, the Global Note, DTC's practice is to
credit Participants' accounts on the applicable payment date therefor with
payments in amounts proportionate to their respective beneficial interests in
the Registrable Notes represented by the Global Note, as shown on the records of
DTC (adjusted as necessary so that such payments are made with respect to whole
Registrable Notes only), unless DTC has reason to believe that it will not
receive payment on such payment date. Payments by Participants to owners of
beneficial interests in Registrable Notes represented by the Global Note held
through such Participants will be the responsibility of such Participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
Holders who desire to convert their Registrable Notes into Common Stock
pursuant to the terms of the Registrable Notes should contact their brokers or
other Participants or Indirect Participants to obtain information on procedures,
including proper forms and cut-off times, for submitting such requests.
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Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Registrable Notes represented by the Global Note
to pledge such interest to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Registrable Notes (including, without limitation, the
presentation of Registrable Notes for exchange as described below), only at the
direction of one or more Participants to whose account DTC interests in the
Global Note are credited and only in respect of the principal amount of the
Registrable Notes represented by the Global Note as to which such Participant or
Participants has or have given such direction.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among Participants of DTC, DTC is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depository and a successor depository is not appointed by
the Company within 90 days, the Company will cause Registrable Notes to be
issued in definitive form in exchange for the Global Note. Such definitive
certificated Registrable Notes shall be registered in names of the owners of the
beneficial interests in the Global Note as provided by the Participants. Notes
issued in definitive certificated form will be fully registered, without
coupons, in minimum denominations of $1,000 and integral multiples of $1,000
above that amount. Upon issuance of Registrable Notes in definitive certificated
form, the Trustee is required to register the Registrable Notes in the name of,
and cause the Registrable Notes to be delivered to, the person or persons (or
the nominee thereof) identified as the beneficial owner as DTC shall direct.
None of the Company, the Trustee nor any of their respective agents will have
any responsibility for the performance by DTC, its Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations, including maintaining, supervising or reviewing the
records relating to, or payments made on account of, beneficial ownership
interests in the Global Note.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
REGISTRATION RIGHTS
In connection with the Original Offering, the Company entered into the
Registration Agreement, pursuant to which the Company agreed to, at the
Company's expense, file with the Commission a shelf registration statement
covering resales by Holders of Notes and Common Stock issuable upon conversion
of the Notes within 90 days after the date of original issuance of the
Registrable Notes and use its reasonable best efforts to cause such registration
statement to be declared effective within 180 days following such date. The
Company also agreed to use all reasonable efforts to keep the registration
statement effective for two years after the date of original issuance of the
Registrable Notes (the "Effectiveness Period").
If the prospectus is unavailable for periods in excess of those permitted
under the Registration Agreement, the Company will pay liquidated damages to
each Holder of Notes or Common Stock issuable upon conversion thereof. The
amount of liquidated damages payable during any period in which the prospectus
is unavailable is that amount which is equal to one-quarter of one percent (25
basis points) per annum per $1,000 principal amount of Notes or $2.50 per annum
per 35.078 shares of Common Stock (subject to adjustment in the event of a stock
split, recombination, stock dividend and the like) issuable upon conversion
thereof, for the first 90 days of any such period and 50 basis points per annum
per $1,000
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principal amount of Notes or $5.00 per annum per 35.078 shares of Common Stock
(subject to adjustment as set forth above) issuable upon conversion thereof, for
any additional continuing days in which the prospectus is unavailable.
CONCERNING THE TRUSTEE
The Bank of New York, the Trustee under the Indenture, has been appointed by
the Company as the initial Paying Agent, Conversion Agent, Registrar and
Custodian with regard to the Registrable Notes. The Company may maintain deposit
accounts and conduct other banking transactions with the Trustee or its
affiliates in the ordinary course of business, and the Trustee and its
affiliates may from time to time in the future provide banking and other
services to the Company in the ordinary course of their business.
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York, New
York are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is a
party that is required to be classified and accounted for as a capital lease
obligation under generally accepted accounting principles in the United States.
"Change of Control" means:
(i) an event or series of events as a result of which any "person" or
"group" (as such terms are used in Sections 13(d)(3) and 14(d) of the Exchange
Act) (excluding the Company or any wholly-owned subsidiary thereof) is or
becomes, directly or indirectly, the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, whether or not applicable) of more than
50% of the combined voting power of the then outstanding securities entitled to
vote generally in elections of directors, managers or trustees, as applicable,
of the Company or any successor entity ("Voting Stock"); or
(ii) the completion of any consolidation with or merger of the Company into
any other Person, or conveyance, transfer or lease by the Company of all or
substantially all of its assets to any Person, or any merger of any other Person
into the Company in a single transaction or series of related transactions, and,
in the case of any such transaction or series of related transactions, the
outstanding Common Stock is changed or exchanged as a result, unless the
stockholders of the Company immediately before such transaction own, directly or
indirectly, immediately following such transaction, at least a majority of the
combined voting power of the outstanding Voting Stock of the Person resulting
from such transaction in substantially the same proportion as their ownership of
the Voting Stock immediately before such transaction;
provided that a Change of Control shall not be deemed to have occurred if the
last sale price of the Common Stock for any five trading days during the 10
trading days immediately preceding the Change of Control is at least equal to
105% of the Conversion Price in effect on each such trading day.
"Designated Senior Indebtedness" means the Company's obligations under its
revolving credit facility with Midland Bank plc and the Company's obligations
under any other Senior Indebtedness in which the instrument creating or
evidencing the same or any assumption of guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides that
such Senior Indebtedness shall be "Designated Senior Indebtedness" for the
purposes of the Indenture; provided that any such instrument, agreement or other
document may place limitations and conditions on the rights of such Senior
Indebtedness to exercise the rights of Designated Senior Indebtedness.
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"Disqualified Capital Stock" means, with respect to the Company, Capital
Stock of the Company that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of an event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by the Company, in
whole or in part, on or prior to the Stated Maturity of the Registrable Notes,
provided that only the portion of such Capital Stock which is so convertible,
exercisable, exchangeable or redeemable or subject to repurchase prior to such
Stated Maturity shall be deemed to be Disqualified Capital Stock.
"Indebtedness" of any Person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of any such Person, (i) in respect of
borrowed money (whether or not the lender has recourse to all or any portion of
the assets of such Person), (ii) evidenced by credit or loan agreements, bonds,
notes, debentures or similar instruments (including, without limitation, notes
or similar instruments given in connection with the acquisition of any business,
properties or assets of any kind), (iii) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks, (iv) for the payment of money
relating to a Capitalized Lease Obligation, or (v) evidenced by a letter of
credit or a reimbursement obligation of such Person with respect to any letter
of credit; (b) all obligations of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (c) all net
obligations of such Person under Interest Swap and Hedging Obligations; (d) all
liabilities of others of the kind described in the preceding clauses (a), (b) or
(c) that such Person has guaranteed or that is otherwise its legal liability, or
which is secured by a lien on property of such Person; and (e) any and all
deferrals, renewals, extensions, modifications, replacements, restatements,
refinancings and refundings (whether direct or indirect) of, or any indebtedness
or obligation issued in exchange for, any liability of the kind described in any
of the preceding clauses (a), (b), (c) or (d), or this clause (e), whether or
not between or among the same parties.
"Interest Swap and Hedging Obligations" means the obligations of any Person
under any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement or other interest rate hedge agreement, interest rate collar agreement
or other similar agreement or arrangement to which such Person is a party or
beneficiary.
"Junior Securities" means any Qualified Capital Stock (as defined) and any
Indebtedness of the Company that is at least as subordinated in right of payment
to Senior Indebtedness as the Notes and has no scheduled installment of
principal due, by redemption, sinking fund payments or otherwise, on or prior to
the Stated Maturity of the Registrable Notes.
"Qualified Capital Stock" means any Capital Stock of the Company that is not
Disqualified Capital Stock.
"Senior Indebtedness" means all obligations of the Company to pay the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) on, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, any Indebtedness of the Company, whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by the Company, unless the instrument
creating or evidencing such Indebtedness provides that such Indebtedness is not
senior or superior in right of payment to the Registrable Notes or which is pari
passu with, or subordinated to, the Registrable Notes; provided that in no event
shall Senior Indebtedness include (a) Indebtedness of the Company owed or owing
to any subsidiary of the Company or any officer, director or employee of the
Company or any subsidiary of the Company, (b) Indebtedness representing or with
respect to any account payable or other accrued current liability or obligation
incurred in the ordinary course of business in connection with the obtaining of
materials or services or (c) any liability for taxes owed or owing by the
Company or any subsidiary of the Company.
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"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1.02(w) of Regulation S-X
promulgated by the Commission as in effect as of the date of the Indenture.
"Stated Maturity," when used with respect to any Registrable Note, means
June 1, 2003.
"Subsidiary" with respect to any Person, means (i) a corporation a majority
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (iii) any other Person (other than a corporation) in
which such Person, one or more subsidiaries of such Person, or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has at least a majority ownership interest.
CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relating to the purchase, ownership and disposition of the
Registrable Notes and of Common Stock into which Registrable Notes may be
converted, but does not purport to be a complete analysis of all the potential
tax considerations relating thereto. This summary is based on laws, regulations,
rulings and decisions now in effect, all of which are subject to change,
possibly with retroactive effect, or to different interpretations. This summary
deals only with holders that will hold Registrable Notes and Common Stock into
which Registrable Notes may be converted as "capital assets" (within the meaning
of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"))
and does not address tax considerations applicable to investors that may be
subject to special tax rules, such as individual retirement or other
tax-deferred accounts, banks, tax-exempt organizations, insurance companies,
dealers in securities or currencies or persons that will hold Registrable Notes
as part of a hedge, straddle, "synthetic security" or other integrated
investment (including a "conversion transaction") or situations in which the
functional currency of the holder is not the U.S. dollar. This summary discusses
the tax considerations applicable to the initial purchasers of the Registrable
Notes who purchase the Registrable Notes at their "issue price," which for these
purposes equals the first price to the public (not including bond houses,
brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers) at which a substantial amount of
the Registrable Notes is sold for money, and does not discuss the tax
considerations applicable to subsequent purchasers of the Registrable Notes.
This summary also does not consider the effect of any applicable foreign, state,
local or other tax laws.
Persons considering the purchase of Registrable Notes should consult their
own tax advisors with respect to the application of the United States federal
income and estate tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction or under any applicable tax treaty.
As used herein, the term "United States person" means a beneficial owner of
the Registrable Notes or Common Stock that is, for United States federal income
tax purposes (i) an individual who is a citizen or resident (as defined in
Section 7701(b) of the Code) of the United States, (ii) a corporation, or one of
certain other entities created or organized under the laws of the United States
or a political subdivision thereof, (iii) an estate the income of which is
subject to U.S. federal income taxation regardless of its source or (iv) a trust
subject to the primary supervision of a United States court and the control of
one or more United States persons. A "Non-U.S. person" is any person that is not
a United States person. For purposes of the following discussion, a "United
States Holder" is a United States person who is a beneficial owner of
Registrable Notes or Common Stock, and a "Non-U.S. Holder" is a Non-U.S. person
that is a beneficial owner of Registrable Notes or Common Stock.
32
<PAGE>
UNITED STATES HOLDERS
REGISTRABLE NOTES
PAYMENT OF INTEREST
Interest on a Registrable Note generally will be includable in the income of
a United States Holder as ordinary income at the time such interest is received
or accrued, in accordance with such United States Holder's method of accounting
for United States federal income tax purposes.
SALE, EXCHANGE OR REDEMPTION OF A REGISTRABLE NOTE
Upon the sale, exchange or redemption of a Registrable Note, a United States
Holder generally will recognize capital gain or loss equal to the difference
between (i) the amount of cash proceeds and the fair market value of any
property received on the sale, exchange or redemption (except to the extent such
amount is attributable to accrued interest income not previously included in
income, which is taxable as ordinary income) and (ii) such United States
Holder's adjusted tax basis in the Registrable Note. A United States Holder's
adjusted tax basis in a Registrable Note generally will equal the cost of the
Registrable Note to such holder. Such capital gain or loss will be long-term
capital gain or loss if the United States Holder's holding period in the
Registrable Note is more than one year at the time of sale, exchange or
redemption. In the case of a United States Holder who is an individual, capital
gains are generally subject to taxation at preferential rates if certain
prescribed minimum holding periods are met.
CONVERSION OF THE REGISTRABLE NOTES
A United States Holder generally will not recognize any income, gain or loss
upon conversion of a Registrable Note into Common Stock except to the extent the
Common Stock received is considered attributable to accrued interest not
previously included in income (which is taxable as ordinary income) or with
respect to cash received in lieu of a fractional share of Common Stock. A United
States Holder's tax basis in the Common Stock received on conversion of a
Registrable Note generally will be the same as such United States Holder's
adjusted tax basis in the Registrable Note at the time of conversion (reduced by
any basis allocable to a fractional share interest), and the holding period for
the Common Stock received on conversion will generally include the holding
period of the Registrable Note converted. However, a United States Holder's tax
basis in shares of Common Stock considered attributable to accrued interest as
described above generally will equal the amount of such accrued interest
included in income, and the holding period for such shares shall begin on the
date of conversion.
Cash received in lieu of a fractional share of Common Stock upon conversion
will be treated as a payment in exchange for the fractional share of Common
Stock. Accordingly, the receipt of cash in lieu of a fractional share of Common
Stock generally will result in capital gain or loss (measured by the difference
between the cash received for the fractional share and the United States
Holder's adjusted tax basis attributable to the fractional share).
ADJUSTMENTS TO CONVERSION RATE TREATED AS CONSTRUCTIVE DIVIDEND
If at any time (i) the Company makes a distribution of cash or property to
its stockholders or purchases Common Stock and such distribution or purchase
would be taxable to such stockholders as a dividend for United States federal
income tax purposes (e.g., distributions of evidences of indebtedness or assets
of the Company, but generally not stock dividends or rights to subscribe for
Common Stock) and, pursuant to the antidilution provisions of the Indenture, the
conversion rate of the Registrable Notes is increased, or (ii) the conversion
rate of the Registrable Notes is increased at the discretion of the Company,
such increase in conversion rate may be deemed to be the payment of a taxable
dividend to holders of Registrable Notes (pursuant to Section 305 of the Code).
Holders of Registrable Notes could therefore have taxable income as a result of
an event pursuant to which they received no cash or property.
33
<PAGE>
COMMON STOCK
TAXATION OF DISTRIBUTIONS
To the extent paid out of current or accumulated earnings and profits of the
Company, as determined under United States federal income tax principles
("E&P"), a distribution made with respect to Common Stock will be includable for
United States federal income tax purposes in the income of a United States
Holder as ordinary dividend income. To the extent that such distribution exceeds
the E&P of the Company, it will be treated as a non-taxable return of capital to
the extent of the United States Holder's adjusted tax basis in the Common Stock
and thereafter taxable as capital gain.
SALE OF COMMON STOCK
Upon the sale or exchange of Common Stock, a United States Holder generally
will recognize capital gain or loss equal to the difference between (i) the
amount of cash and the fair market value of any property received upon the sale
or exchange and (ii) such United States Holder's adjusted tax basis in the
Common Stock sold or exchanged.
Such capital gain or loss will be long-term capital gain or loss if the
United States Holder's holding period in Common Stock is more than one year at
the time of the sale or exchange. A United States Holder's basis and holding
period in Common Stock received upon conversion of a Registrable Note generally
are determined by reference to the basis and holding period of the Registrable
Note so converted. See the discussion above under "--Conversion of the
Registrable Notes". In the case of a United States Holder who is an individual,
capital gains are generally subject to taxation at preferential rates if certain
prescribed minimum holding periods are met.
NON-U.S. HOLDERS
REGISTRABLE NOTES
STATED INTEREST
Payments of principal and interest on a Registrable Note to a Non-U.S.
Holder will not be subject to United States federal withholding tax provided
that (a) the holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (b) the holder is not a controlled foreign corporation that is related,
directly or indirectly, to the Company through stock ownership, (c) the holder
is not a bank receiving interest described in Section 881(c)(3)(A) of the Code
and (d) either (1) the beneficial owner of the Registrable Note, under penalties
of perjury, provides the Company or its agent with its name and address and
certifies that it is not a United States person or (2) a securities clearing
organization, bank, or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") certifies to the Company or its agent, under penalties of perjury,
that such a statement has been received from the beneficial owner by it or
another financial institution and furnishes to the Company or its agent a copy
thereof (the "Portfolio Interest Exemption"). The gross amount of payments of
interest to a Non-U.S. Holder that does not qualify for the Portfolio Interest
Exemption and that is not effectively connected with a United States trade or
business will be subject to United States federal income tax at the rate of 30%,
unless a United States income tax treaty applies to reduce or eliminate
withholding.
A Non-U.S. Holder that is engaged in a trade or business in the United
States will generally be subject to tax in the same manner as a United States
corporation or resident to the extent that such income is effectively connected
with the conduct of such trade or business. Such effectively connected income
received by a Non-U.S. Holder which is a corporation may in certain
circumstances be subject to an additional "branch profits tax" at a 30% rate or,
if applicable, a lower treaty rate.
To claim the benefit of a tax treaty or to claim exemption from withholding
because the income is effectively connected with a U.S. trade or business, the
Non-U.S. Holder must provide a properly executed Form 1001 or 4224, as
applicable, prior to the payment of interest. These forms must be periodically
updated. Finalized Treasury Regulations applicable to payments made after
December 31, 1999 require
34
<PAGE>
Non-U.S. Holders or, under certain circumstances, a "qualified intermediary" to
file a "withholding certificate" with the Company's withholding agent to obtain
the benefit of an applicable tax treaty providing for a lower rate of
withholding tax. Such certificate must contain, among other information, the
name and address of the Non-U.S. Holder.
SALE, EXCHANGE OR REDEMPTION OF A REGISTRABLE NOTE
A Non-U.S. Holder generally will not be subject to United States federal
income tax or withholding tax on gain realized on the sale or exchange of
Registrable Notes unless (i) the holder is an individual who was present in the
United States for 183 days or more during the taxable year and certain other
conditions are met or (ii) the gain is effectively connected with the conduct of
a trade or business of the holder in the United States.
CONVERSION OF THE REGISTRABLE NOTES
In general, no United States federal income tax or withholding tax will be
imposed upon the conversion of a Registrable Note into Common Stock by a
Non-U.S. Holder except (i) to the extent the Common Stock received is considered
attributable to accrued interest not previously included in income which is not
exempt from U.S. taxation (because no exemption from U.S. taxation applies with
respect to such income) or (ii) with respect to the receipt of cash in lieu of
fractional shares by Non-U.S. Holders upon conversion of a Registrable Note, in
each case where either of the conditions described in (i) or (ii) above under
"Non-U.S. Holders--Sale, Exchange or Redemption of a Registrable Note" is
satisfied.
COMMON STOCK
TAXATION OF DISTRIBUTIONS
Distributions by the Company with respect to the Common Stock that are
treated as dividends paid (or deemed paid), as described above under "United
States Holders--Adjustments to Conversion Rate Treated as Constructive Dividend;
- --Taxation of Distributions" to a Non-U.S. Holder (excluding dividends that are
effectively connected with the conduct of a trade or business in the United
States by such Holder, which are taxable as described below) will be subject to
United States federal withholding tax at a 30% rate (or lower rate provided
under any applicable income tax treaty). Except to the extent that an applicable
tax treaty otherwise provides, a Non-U.S. Holder will be subject to tax in the
same manner as a United States Holder on dividends paid (or deemed paid) that
are effectively connected with the conduct of a trade or business in the United
States by the Non-U.S. Holder. If such Non-U.S. Holder is a foreign corporation,
it may also be subject to a United States "branch profits tax" on such
effectively connected income at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty. Even though such effectively
connected dividends are subject to income tax, and may be subject to the branch
profits tax, they will not be subject to U.S. withholding tax if the Non-U.S.
Holder delivers IRS Form 4224 to the payor.
Under current United States Treasury Regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of United
States Treasury Regulations, for purposes of determining the applicability of a
tax treaty rate. Under finalized Treasury Regulations applicable to payments
made after December 31, 1999, however, a Non-U.S. Holder of Common Stock who
wishes to claim the benefit of an applicable treaty rate would be required to
satisfy applicable certification requirements.
SALE OR EXCHANGE OF COMMON STOCK
A Non-U.S. Holder will generally not be subject to United States federal
income tax or withholding tax on the sale or exchange of Common Stock unless
either of the conditions described in (i) or (ii) above under "Non-U.S.
Holders--Sale, Exchange or Redemption of a Registrable Note" is satisfied or the
Company is or has been a United States real property holding corporation for
United States federal income tax purposes (which the Company does not believe
that it is or is likely to become) at any time within the shorter of the five
year period preceding such disposition or such Non-U.S. Holder's holding period.
35
<PAGE>
UNITED STATES ESTATE TAX
A Registrable Note held by an individual who is not a citizen or resident of
the United States at the time of death will not be includable in the decedent's
gross estate for United States estate tax purposes, provided that such holder or
beneficial owner did not at the time of death actually or constructively own 10%
or more of the combined voting power of all classes of stock of the Company
entitled to vote, and provided that, at the time of death, payments with respect
to such Registrable Note would not have been effectively connected with the
conduct by such Non-U.S. Holder of a trade or business within the United States.
Common Stock actually or beneficially held (other than through a foreign
corporation) by a Non-U.S. Holder at the time of his or her death (or previously
transferred subject to certain retained rights or powers) will be subject to
United States federal estate tax unless otherwise provided by an applicable
estate tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments of
interest or dividends or the proceeds of the sale or other disposition of a
Registrable Note or shares of Common Stock made by the Company with respect to
certain noncorporate United States Holders, and a 31% backup withholding tax may
apply to such payments if the United States Holder (i) fails to furnish or
certify his correct taxpayer identification number ("TIN") to the payor in the
manner required, (ii) is notified by the IRS that he has failed to report
payments of interest or dividends properly or (iii) under certain circumstances,
fails to certify that he has not been notified by the IRS that he is subject to
backup withholding for failure to report interest or dividend payments.
Information reporting requirements may apply to payments of interest or
dividends to Non-U.S. Holders where such interest or dividends are subject to
withholding or are exempt from United States withholding tax or eligible for a
reduced rate pursuant to a tax treaty, or where such interest is exempt from
United States tax under the Portfolio Interest Exemption. Copies of these
information returns may also be made available under the provisions of a
specific treaty or agreement to the tax authorities of the country in which the
Non-U.S. Holder resides.
Treasury Regulations provide that backup withholding and information
reporting will not apply to payments of principal on the Registrable Notes by
the Company to a Non-U.S. Holder if the Non-U.S. Holder certifies as to its
status as a Non-U.S. Holder under penalties of perjury or otherwise establishes
an exemption (provided that neither the Company nor its paying agent has actual
knowledge that the holder is a United States person or that the conditions of
any other exemption are not, in fact, satisfied).
The payment of the proceeds from the disposition of Registrable Notes or
Common Stock to or through the United States office of any broker, United States
or foreign, will be subject to information reporting and possible backup
withholding unless the owner certifies as to its non-United States status under
penalties of perjury or otherwise establishes an exemption, provided that the
broker does not have actual knowledge that the holder is a United States person
or that the conditions of any other exemption are not, in fact, satisfied. The
payment of the proceeds from the disposition of a Registrable Note or Common
Stock to or through a non-United States office of a non-United States broker
that is not a United States related person will not be subject to information
reporting or backup withholding. For this purpose, a "United States related
person" is (i) a "controlled foreign corporation" for United States federal
income tax purposes or (ii) a foreign person 50% or more of whose gross income
from all sources for the three-year period ending with the close of its taxable
year preceding the payment (or for such part of the period that the broker has
been in existence) is derived from activities that are effectively connected
with the conduct of a United States trade or business. In the case of the
payment of proceeds from the disposition of Registrable Notes or Common Stock to
or through a non-United States office of a broker that is either a United States
person or a United States related person, Treasury Regulations require
information reporting on the payment unless the broker has documentary evidence
in its files that the owner is a Non-U.S. Holder and the broker has no knowledge
to the contrary.
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<PAGE>
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS.
Finalized Treasury Regulations have generally expanded the circumstances
under which information reporting and backup withholding may apply for payments
made after December 31, 1999. Holders of Registrable Notes should consult their
tax advisors regarding the application of the information reporting and backup
withholding rules, including such Treasury Regulations.
SELLING HOLDERS
The Registrable Notes offered hereby were originally issued by the Company
and sold by the Initial Purchasers, in a transaction exempt from the
registration requirements of the Securities Act, to persons reasonably believed
by such initial purchaser to be "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act), or other institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act). The Selling Holders (which term includes their transferees, pledges donees
or their successors) may from time to time offer and sell pursuant to this
Prospectus any or all of the Registrable Notes and Common Stock issued upon
conversion of the Registrable Notes.
The following table sets forth information, as of November 1, 1998 (except
as noted below) with respect to the Selling Holders and the respective principal
amounts of Registrable Notes beneficially owned by each Selling Holder that may
be offered pursuant to this Prospectus. Such information has been obtained from
the Selling Holders. None of the Selling Holders has, or within the past three
years has had, any position, office or other material relationship with the
Company or any of its predecessors or affiliates, except as noted below. Because
the Selling Holders may offer all or some portion of the Registrable Notes or
the Common Stock issuable upon conversion thereof pursuant to this Prospectus,
no estimate can be given as to the amount of the Registrable Notes or the Common
Stock issuable upon conversion thereof that will be held by the Selling Holders
upon termination of any such sales. In addition, the Selling Holders identified
below may have sold, transferred or otherwise disposed of all or a portion of
their Registrable Notes since the date on which they provided the information
regarding their Registrable Notes in transactions exempt from the registration
requirements of the Securities Act.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF REGISTRABLE NUMBER OF SHARES OF
NOTES COMMON STOCK
BENEFICIALLY ------------------------
OWNED AND BENEFICIALLY OFFERED
SELLING HOLDER OFFERED HEREBY OWNED(1)(2) HEREBY(2)
- --------------------------------------------------------------------- ---------------- ------------ ----------
<S> <C> <C> <C>
The Northwestern Mutual Life Insurance Company(3).................... 7,500,000 837,488 263,088
SG Cowen Securities Corporation(6)................................... 6,985,000 245,023 245,023
J.P. Morgan Investment Management.................................... 6,000,000 489,870 210,470
BT Alex.Brown Inc.................................................... 5,980,000 209,769 209,769
Bond Fund Series--Oppenheimer Convertible Securities
Fund............................................................... 5,000,000 175,392 175,392
NMS Services, Inc.................................................... 5,000,000 175,392 175,392
Aon Pension Fund..................................................... 4,350,000 167,591 152,591
BNP Arbitrage SNC.................................................... 4,200,000 158,529 147,329
Lincoln National Convertible Securities Fund......................... 3,395,000 119,091 119,091
Highbridge Capital Corporation....................................... 3,000,000 105,235 105,235
CFW-C, L.P........................................................... 2,500,000 87,696 87,696
Alta Partners Holdings, LDC.......................................... 1,500,000 52,617 52,617
Argent Classic Convertible Arbitrage Fund (Bermuda) L.P.............. 1,500,000 52,617 52,617
Bankers Trust International.......................................... 1,500,000 52,617 52,617
Deutsche Bank A.G.(6)................................................ 1,500,000 52,617 52,617
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF REGISTRABLE NUMBER OF SHARES OF
NOTES COMMON STOCK
BENEFICIALLY ------------------------
OWNED AND BENEFICIALLY OFFERED
SELLING HOLDER OFFERED HEREBY OWNED(1)(2) HEREBY(2)
- --------------------------------------------------------------------- ---------------- ------------ ----------
<S> <C> <C> <C>
Deutsche Bank Securities Inc.(6)..................................... 1,500,000 252,617 252,617
Highmark Convertible Securities Fund................................. 1,200,000 42,094 42,094
National Steel Corporation(4)........................................ 1,165,000 40,866 40,866
Banque Nationale de Paris............................................ 1,000,000 35,078 35,078
Camelot Capital LP................................................... 1,000,000 35,078 35,078
Smith Barney Convertibles Portfolio(5)............................... 1,000,000 35,078 35,078
Value Line Convertible Fund, Inc..................................... 1,000,000 35,078 35,078
Camelot Offshore Fund, Ltd........................................... 500,000 17,539 17,539
Winchester Convertible Plus.......................................... 450,000 15,785 15,785
Walker Art Center.................................................... 440,000 15,434 15,434
Foundation Account No. 1............................................. 380,000 13,329 13,329
Homestead Ltd./Elser & Co............................................ 250,000 8,769 8,769
San Diego City Retirement............................................ 220,000 7,717 7,717
Merrill Lynch Insurance Group........................................ 200,000 7,015 7,015
LLC Account No. 1.................................................... 170,000 5,963 5,963
Occidental Petroleum................................................. 150,000 5,261 5,261
Van Daalen, Albert C.(7)............................................. 100,000 3,507 3,507
Any other holder of Registrable Notes or future transferee of any
such holder(8)..................................................... $ 4,365,000 153,117 153,117
Total................................................................ $ 75,000,000 3,853,408 2,630,865
</TABLE>
- ------------------------
(1) Includes shares of Common Stock issuable upon conversion of the Registrable
Notes.
(2) Assumes a conversion price of $28.5075 per share, and a cash payment in lieu
of any fractional share interest.
(3) Includes $500,000 in principal amount held in the Northwestern Mutual Life
Insurance Company Group Annuity Separate Account.
(4) Information with respect to the Selling Holders and the respective principal
amounts of Registrable Notes beneficially owned by each Selling Holder as of
July 17, 1998.
(5) Information with respect to the Selling Holders and the respective principal
amounts of Registrable Notes beneficially owned by each Selling Holder as of
July 27, 1998.
(6) Information with respect to the Selling Holders and the respective principal
amounts of Registrable Notes beneficially owned by each Selling Holder as of
November 12, 1998.
(7) Information with respect to the Selling Holders and the respective principal
amounts of Registrable Notes beneficially owned by each Selling Holder as of
July 23, 1998.
(8) Information containing other Registrable Note Selling Holders will be set
forth in Prospectus Supplements from time to time, if required.
Information concerning the Selling Holders may change from time to time and
any such changed information will be set forth in supplements to this Prospectus
if and when necessary. In addition, the per share conversion price, and
therefore the number of shares issuable upon conversion of the Registrable
Notes, is subject to adjustment under certain circumstances. Accordingly, the
aggregate principal amount of Registrable Notes and the number of shares of
Common Stock issuable upon conversion thereof offered hereby may increase or
decrease.
38
<PAGE>
PLAN OF DISTRIBUTION
The Registrable Notes and Common Stock offered hereby may be sold from time
to time to purchasers directly by the Selling Holders. Alternatively, the
Selling Holders may from time to time offer the Registrable Notes and Common
Stock to or through underwriters, broker/dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Holders or the purchasers of Registrable Notes and Common Stock
for whom they may act as agents. The Selling Holders and any underwriters,
broker/dealers or agents that participate in the distribution of Registrable
Notes and Common Stock may be deemed to be "underwriters" within the meaning of
the Securities Act and any profit on the sale of Registrable Notes and Common
Stock by them and any discounts, commissions, concessions or other compensation
received by any such underwriter, broker/ dealer or agent may be deemed to be
underwriting discounts and commissions under the Securities Act.
The Registrable Notes and Common Stock offered hereby may be sold from time
to time in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, any varying prices determined at the time of sale or at
negotiated prices. The sale of the Registrable Notes and the Common Stock
issuable upon conversion thereof may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Registrable Notes or the Common Stock may be
listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii)
in transactions otherwise than on such exchanges or in the over-the-counter
market or (iv) through the writing of options. At the time a particular offering
of the Registrable Notes and the Common Stock is made, a Prospectus Supplement,
if required, will be distributed which will set forth the aggregate amount and
type of Registrable Notes and Common Stock being offered and the terms of the
offering, including the name or names of any underwriters, brokers/dealers or
agents, any discounts, commissions and other terms constituting compensation
from the Selling Holders and any discounts, commissions or concessions allowed
or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Registrable Notes and Common Stock will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the Registrable Notes and Common Stock may
not be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or any exemption from registration or qualification is
available and is complied with.
The Selling Holders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, which provisions may limit the
timing of purchases and sales of any of the Registrable Notes and Common Stock
by the Selling Holders. The foregoing may affect the marketability of the
Registrable Notes and the Common Stock.
Pursuant to the Registration Agreement, all expenses of the registration of
the Registrable Notes and Common Stock will be paid by the Company, including,
without limitation, Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Holders will
pay all underwriting discounts and selling commissions, if any. The Selling
Holders will be indemnified by the Company against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
Any Initial Purchaser who is also a Selling Holder may be, depending on
facts and circumstances, a statutory underwriter and must acknowledge in writing
prior to resale that it will deliver a prospectus in connection with any resale
of the Registrable Notes or underlying Common Stock. By so acknowledging and
delivering a prospectus, an Initial Purchaser who is also a Selling Holder, will
not be deemed to admit that it is an underwriter with the meaning of the
Securities Act.
39
<PAGE>
LEGAL MATTERS
The validity of the Registrable Notes and the Common Stock being offered
hereby will be passed upon for the Company by Shearman & Sterling, London,
England.
EXPERTS
The consolidated balance sheets of Getty Communications as of December 31,
1996 and 1997 and the consolidated statements of operations and cash flows of
Getty Communications for the period March 14, 1995 through December 31, 1995 and
for the years ended December 31, 1996 and 1997 and the consolidated statements
of operations and cash flows of Tony Stone Associates Limited and subsidiaries
(predecessor) for the period January 1, 1995 through March 13, 1995 appearing in
the Annual Report on Form 10-K of Getty Images, Inc. and incorporated by
reference herein have been audited by Coopers & Lybrand, independent
accountants, as stated in their report appearing therein given upon the
authority of such firm as experts in accounting and auditing.
The consolidated balance sheet of PhotoDisc, Inc. as of December 31, 1997
and the related consolidated statements of income, shareholders' equity and cash
flows for the year ended December 31, 1997 appearing in the Amendment to Current
Report on Form 8-K/A of Getty Images, Inc. filed with the Commission on April
27, 1998 and incorporated by reference herein have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their report
appearing therein given upon the authority of such firm as experts in accounting
and auditing.
The consolidated balance sheet of PhotoDisc, Inc., as of December 31, 1996
and the consolidated statements of income, shareholders' equity and cash flows
for the years ended December 31, 1995 and 1996 appearing in the Current Report
on Form 8-K of Getty Images, Inc. filed with the Commission on May 6, 1998, and
incorporated by reference herein have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated balance sheets of Allsport Photographic plc as of November
30, 1997 and the related consolidated profit and loss account and statement of
cash flows for the year ended November 30, 1997 appearing in the Amendment to
Current Report on Form 8-K/A of Getty Images, Inc. filed with the Commission on
April 27, 1998 and incorporated by reference herein have been audited by
Maidment, Penney, Quick & Co., independent accountants, as stated in their
report appearing therein given upon the authority of such firm as experts in
accounting and auditing.
40
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN AS CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY ANY
PERSON IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 3
Summary................................................................... 4
Risk Factors.............................................................. 9
Ratio of Earnings to Fixed Charges........................................ 15
Use of Proceeds........................................................... 15
Description of Capital Stock.............................................. 16
Description of Registrable Notes.......................................... 17
Certain U.S. Federal Tax Considerations................................... 32
Selling Holders........................................................... 37
Plan of Distribution...................................................... 39
Legal Matters............................................................. 40
Experts................................................................... 40
</TABLE>
GETTY IMAGES, INC.
$75,000,000
4.75% CONVERTIBLE
SUBORDINATED NOTES
DUE 2003
----------------
[LOGO]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Company in connection with the sale of
the securities being registered. All of the amounts shown are estimates except
for the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 22,125
Printing and Engraving Expenses............................. 25,000
Legal Fees and Expenses..................................... 80,000
Accounting Fees and Expenses................................ 40,000
Miscellaneous............................................... 875
----------
Total................................................... $ 168,000
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except to the extent indicated below, there is no charter provision, by-law,
contract, arrangement or statute under which any controlling person, director or
officer of the Company is insured or indemnified in any manner against any
liability which he or she may incur in his or her capacity as such.
The Delaware General Corporation Law (the "DGCL") provides that a
corporation may, and in certain circumstances must, indemnify its directors,
officers, employees and agents for expenses, judgments or settlements actually
and reasonably incurred by them in connection with suits and other legal actions
or proceedings if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. In any such suit or action brought by or on
behalf of the corporation, such indemnification is limited to expenses incurred
in defense or settlement of the suit or action. The DGCL also permits a
corporation to adopt procedures for advancing expenses to directors, officers
and others without the need for a case-by-case determination of eligibility, so
long as, in the case of officers and directors, they undertake to repay the
amounts advanced if it is ultimately determined that the officer or director was
not entitled to be indemnified. The Certificate of Incorporation of the Company
(the "Certificate of Incorporation") and the Bylaws of the Company (the
"Bylaws") contain provisions for indemnification of directors and officers and
for the advancements of expenses to any director or officer to the fullest
extent of the law.
The DGCL permits corporations to purchase and maintain insurance for
directors and officers against liability for expenses, judgments or settlements,
whether or not the corporation would have the power to indemnify such persons
therefor. The Bylaws permit the Company to purchase such insurance.
The Company has also agreed by contract to indemnify the directors and
certain officers of the Company for certain liabilities incurred by such persons
by reason of the fact that such person is a director or officer, provided that
such person was acting in good faith.
ITEM 16. EXHIBITS
<TABLE>
<C> <C> <S>
(1) 4.1 Indenture, dated as of May 27, 1998, between Getty Images, Inc. and The Bank
of New York, as Trustee
(1) 4.2 Form of Note (included in Exhibit 4.1)
(2) 4.3 Certificate representing Common Stock
(3) 4.4 Amended and Restated Certificate of Incorporation of Getty Images
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <C> <S>
(4) 4.5 Certificate of Amendment to the Certificate of Incorporation of Getty Images
(3) 4.6 By-laws of Getty Images
(1) 4.7 Registration Rights Agreement, dated as of May 27, 1998, among Getty Images,
Inc. and BT Alex.Brown Incorporated, BancAmerica Robertson Stephens,
Donaldson, Lufkin & Jenrette Securities Corporation and Hambrecht & Quist
LLC
* 5.1 Opinion of Shearman & Sterling
** 12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
** 23.1 Consent of Coopers & Lybrand, London, England.
** 23.2 Consent of PricewaterhouseCoopers LLP, Seattle, Washington
** 23.3 Consent of Deloitte & Touche LLP, Seattle, Washington
** 23.4 Consent of Maidment, Penney, Quick & Co.
* 23.5 Consent of Shearman & Sterling (included in Exhibit 5.1)
* 24.1 Powers of Attorney (contained on page II-4)
* 25.1 Statement of Eligibility of Trustee on Form T-1
</TABLE>
- ------------------------
* Previously filed with initial Registration Statement.
** File herewith.
(1) Incorporated by reference from the Exhibits to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.
(2) Incorporated by reference from the Exhibits to the Form 8-A Registration
Statement No. 333-38777 of the Registrant.
(3) Incorporated by reference from the Exhibits to the Form S-4 Registration
Statement No. 333-38777 of the Registrant. (Exhibit number in the Form S-4
is set forth in italics)
(4) Incorporated by reference from the Exhibits to the Registrant's Current
Report on Form 8-K filed with the SEC on November 10, 1998.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
II-2
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the entities being registered which remain unsold at the termination
of the offering.
(b) The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The Registrant hereby undertakes to deliver or cause to be delivered
with the Prospectus, to each person to whom the Prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the Prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Exchange Act; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are not set
forth in the Prospectus, to deliver, or cause to be delivered to each person to
whom the Prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
London, England, on the 12th day of November 1998.
<TABLE>
<S> <C> <C>
GETTY IMAGES, INC.
By: /s/ MARK GETTY
-----------------------------------------
Name: Mark Getty
TITLE: CHAIRMAN
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on November 12, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE (CAPACITY)
- ------------------------------ --------------------------
<C> <S>
/s/ MARK GETTY
- ------------------------------ Chairman and Director
Mark Getty
/s/ MARK TORRANCE
- ------------------------------ Vice-Chairman and Director
Mark Torrance
/s/ JONATHAN KLEIN Chief Executive Officer
- ------------------------------ and Director (Principal
Jonathan Klein Executive Officer)
Treasurer (Principal
/s/ LAWRENCE GOULD Financial Officer and
- ------------------------------ Principal Accounting
Lawrence Gould Officer)
*
- ------------------------------ Director
Andrew Garb
*
- ------------------------------ Director
Anthony Stone
*
- ------------------------------ Director
James Bailey
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE (CAPACITY)
- ------------------------------ --------------------------
<C> <S>
*
- ------------------------------ Director
Manny Fernandez
*
- ------------------------------ Director
Christopher Sporborg
</TABLE>
<TABLE>
<S> <C> <C>
*By: /s/ MARK GETTY
--------------------------------- Attorney-in-Fact
Mark Getty
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <C> <S>
(1) 4.1 Indenture, dated as of May 27, 1998, between Getty Images, Inc. and The Bank of New
York, as Trustee
(1) 4.2 Form of Note (included in Exhibit 4.1)
(2) 4.3 Certificate representing Common Stock
(3) 4.4 Amended and Restated Certificate of Incorporation of Getty Images (3.1)
(4) 4.5 Certificate of Amendment to the Certificate of Incorporation of Getty Images
(3) 4.6 By-laws of Getty Images (3.2)
(1) 4.7 Registration Rights Agreement, dated as of May 27, 1998, among Getty Images, Inc.
and BT Alex.Brown Incorporated, BancAmerica Robertson Stephens, Donaldson, Lufkin
& Jenrette Securities Corporation and Hambrecht & Quist LLC
* 5.1 Opinion of Shearman & Sterling
** 12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
** 23.1 Consent of Coopers & Lybrand, London, England
** 23.2 Consent of PricewaterhouseCoopers LLP, Seattle, Washington.
** 23.3 Consent of Deloitte & Touche LLP, Seattle, Washington
** 23.4 Consent of Maidment, Penney, Quick & Co.
* 23.5 Consent of Shearman & Sterling (included in Exhibit 5.1)
* 24.1 Powers of Attorney (contained on page II-4)
* 25.1 Statement of Eligibility on Form T-1
</TABLE>
- ------------------------
* Previously filed with the initial Registration Statement.
** Filed herewith.
(1) Incorporated by reference from the Exhibits to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998.
(2) Incorporated by reference from the Exhibits to the Form 8-A Registration
Statement No. 333-38777 of the Registrant.
(3) Incorporated by reference from the Exhibits to the Form S-4 Registration
Statement No. 333-38777 of the Registrant. (Exhibit number in the Form S-4
is set forth in italics).
(4) Incorporated by reference from the Exhibits to the Registrant's Current
Report on Form 8-K filed with the SEC on November 10, 1998.
II-6
<PAGE>
EXHIBIT 12.1
STATEMENT RE: COMPUTATION OF
RATIO OF EARNINGS TO
FIXED CHARGES
<TABLE>
<CAPTION>
SIX
MONTHS ENDED
JUNE 30,
1993 1994 1995 1996 1997 1998
----- ----- ----- ----- ------ ------------
$ $ $ $ $ $
(IN THOUSANDS, EXCEPT RATIO OF EARNINGS TO FIXED
CHARGES)
<S> <C> <C> <C> <C> <C> <C>
Income/(loss) from continuing operations.............................. 1,169 1,694 1,271 2,728 4,022 (19,276)
Add income tax........................................................ 573 1,556 2,017 2,982 3,873 369
----- ----- ----- ----- ------ ------------
Pretax income/(loss) from continuing
operations.......................................................... 1,742 3,250 3,288 5,710 7,895 (18,907)
Add
Amortization of debt expense.......................................... 0 0 0 51 102
Interest expense...................................................... 167 247 1,483 2,254 1,376
Interest included in rental expenses.................................. 180 236 314 450 1,018
----- ----- ----- ----- ------
ADJUSTED EARNINGS..................................................... 2,089 3,733 5,085 8,465 10,391
----- ----- ----- ----- ------
FIXED CHARGES
Amortization of debt expense.......................................... 0 0 0 51 102
Interest expense...................................................... 167 247 1,483 2,254 1,376
Interest included in rental expenses.................................. 180 236 314 450 1,018
----- ----- ----- ----- ------
Total fixed charges................................................... 347 483 1,797 2,755 2,496
----- ----- ----- ----- ------
EARNINGS TO FIXED CHARGES............................................. 6.02 7.73 2.83 3.07 4.16
DEFICIENCY OF EARNINGS TO FIXED CHARGES............................... 0.00 0.00 0.00 0.00 0.00 (18,907)
</TABLE>
- ------------------------
(1) Ratio of earnings to fixed charges means the ratio of net income (before
fixed charges and income taxes) to fixed charges, where fixed charges are
the aggregate of interest, amortization of costs relating to debt and an
allocation of rental charges to approximate equivalent interest.
(2) Deficiency of earnings to fixed charges means the deficiency of income
(before fixed charges and income tax) to fixed charges.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Getty Images, Inc. on Form S-3 of our report dated
March 30, 1998, of our audits of the consolidated financial statements and
financial statement schedules of Getty Communications plc and subsidiaries
appearing in the Annual Report on Form 10-K of Getty Images, Inc. We also
consent to the reference to our firm under the caption "Experts".
Coopers & Lybrand
Chartered Accountants
London, England
November 12, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Getty Images, Inc. on Form S-3 of our report dated
February 25, 1998 of our audit of the consolidated financial statements and
financial statement schedules of PhotoDisc, Inc. and subsidiaries in the
Amendment to Current Report on Form 8-K/A of Getty Images, Inc., filed with the
Securities and Exchange Commission on April 27, 1998. We also consent to the
reference to our firm under the caption "Experts".
PricewaterhouseCoopers LLP
Seattle, Washington
November 12, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-61823 of Getty Images, Inc. on Form S-3 of our
report dated August 12, 1997 (September 16, 1997 as to Note 1), on the audited
consolidated financial statements of PhotoDisc, Inc. appearing in the Current
Report on Form 8-K of Getty Images, Inc., filed with the Securities and Exchange
Commission on May 6, 1998, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
Seattle, Washington
November 11, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Getty Images, Inc. on Form S-3 of our report dated
April 17, 1998 of our audits of the consolidated financial statements and
financial statement schedules of Allsport Photographic plc and subsidiaries in
the Amendment to Current Report on Form 8-K/A of Getty Images, Inc. filed with
the Securities and Exchange Commission on April 27, 1998. We also consent to the
reference to our firm under the caption "Experts".
Maidment, Penney, Quick & Co.
London, England
November 11, 1998
