<PAGE>
As filed with the Securities and Exchange Commission on February 13, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------
GETTY IMAGES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 98-0177556
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
GETTY'S IMAGES, INC.
122 South Michigan Avenue
Suite 900
Chicago, Illinois 60606
(312) 644-7880
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
THE GETTY IMAGES, INC. 1998 STOCK INCENTIVE PLAN
THE GETTY COMMUNICATIONS PLC EXECUTIVE SHARE OPTION PLAN
THE PHOTODISC, INC. 1994 COMBINED INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
------------
ANDREW DUNCOMB
TONY STONE IMAGES/AMERICA, INC.
122 South Michigan Avenue
Suite 900
Chicago, Illinois 60606
(312) 644-7880
(Name, address and telephone number of agent for service)
------------
Copies to:
CHRISTOPHER D. DILLON, ESQ.
Shearman & Sterling
555 California Street
San Francisco, California 94104
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
TITLE OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE PER AGGREGATE REGISTRATION
REGISTERED REGISTERED SECURITY OFFERING PRICE FEE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 10,000,000 $19.875(1) $198,750,000(1) $58,632
$0.01 per share 2,274,314 $12.64 (2) $ 28,747,329(2) $ 8,481
1,788,428 $ 3.40 (3) $ 6,080,656(3) $ 1,794
------------- -------- ------------- -------
TOTAL 14,062,742 $233,577,985 $68,907
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee. Such
estimate is calculated pursuant to Rules 457(c) and 457(h) under the
Securities Act of 1933, as amended (the "Securities Act"), based on the
average of the high and low price of shares of common stock of Getty
Images, Inc. on the Nasdaq National Market on February 12, 1998, which
high and low prices were $20.125 and $19.625, respectively.
<PAGE>
(2) Estimated solely for the purpose of calculating the registration fee. Such
estimate is calculated pursuant to Rule 457(h) under the Securities Act,
based on the weighted average exercise price of the options previously
granted under the Getty Communications plc Executive Share Option Plan.
(3) Estimated solely for the purpose of calculating the registration fee. Such
estimate is calculated pursuant to Rule 457(h) under the Securities Act,
based on the weighted average exercise price of the options previously
granted under the PhotoDisc, Inc. 1994 Combined Incentive and Non-qualified
Stock Option Plan (the "PhotoDisc Plan") divided by 0.9115575, and the
number of PhotoDisc shares subject to options granted under the PhotoDisc
Plan, multiplied by 0.9115575, which factor is, in each case, the
"PhotoDisc Exchange Ratio" as defined in the Merger Agreement that is
attached as Annex A to the Prospectus which forms a part of the Form S-4,
which Form S-4 is incorporated by reference hereto.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. PLAN INFORMATION.*
Item 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
____________________
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended (hereinafter, the
"Securities Act"), and the "Note" to Part I of Form S-8.
<PAGE>
2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following document filed with the Securities and Exchange
Commission (the "Commission") is incorporated by reference in this Registration
Statement:
Amendment No. 5 to the Registrant's Registration Statement on
Form S-4 (File No. 333-38777), filed with the Commission on January 7,
1998, which contains a description of the Registrant's shares of Common
Stock, par value $0.01 per share (the "Shares") registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") under the heading "Description of Getty Images Capital
Stock."
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing
of a post-effective amendment to this Registration Statement which indicates
that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and are a part thereof from the date
of filing of such documents.
Any statement contained in a document incorporated or deemed
incorporated by reference in this Registration Statement shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document 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 Registration Statement.
Item 4. DESCRIPTION OF SECURITIES.
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
Item 6. 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 director
or officer of Getty Images 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 ("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
<PAGE>
3
proceeding, had no reasonable cause to believe their conduct was unlawful.
In 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 Getty Images and the Bylaws
of Getty Images (the "Getty Images By-Laws") contain provisions for
indemnification of directors and officers and for the advancements of
expenses to any officer or director to the fullest extent of the law.
The DGCL permits corporations to purchase and maintain insurance
for directors and officers against liabilities for expenses, judgments or
settlements, whether or not the corporation would have the power to indemnify
such persons therefor. The Getty Images Bylaws permit Getty Images to
purchase such insurance.
Getty Images has also agreed by contract to indemnify the persons
named to become directors and certain officers of Getty Images upon
completion of the transactions (the "Transactions") contemplated by the
Merger Agreement dated as of September 15, 1997 by and among Getty Images,
Getty Communications plc, a public limited company organized under the laws
of England and Wales, PhotoDisc, Inc., a Washington corporation, and Print
Merger Inc., a Washington corporation and a wholly-owned subsidiary of Getty
Images, for certain liabilities incurred by any such person by reason of the
fact that such person was so named to become a director or officer, provided
that such person was acting in good faith.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
Item 8. EXHIBITS.
The following exhibits are filed as part of this Registration
Statement:
4.1 The Getty Images, Inc. 1998 Stock Incentive Plan.
4.2 The Getty Communications plc Executive Share Option Plan.
4.3 The PhotoDisc, Inc. 1994 Combined Incentive and Non-qualified Stock
Option Plan.
4.4 Form of Amended and Restated Certificate of Incorporation of Getty
Images (incorporated by reference from Amendment No. 5 to the
Registrant's Registration Statement on Form S-4 (No. 333-38777),
filed by the Registrant on January 7, 1998).
4.5 Form of Bylaws of Getty Images (incorporated by reference from
Amendment No. 5 to the Registrant's Registration Statement on
Form S-4 (No. 333-38777), filed by the Registrant on January 7, 1998).
<PAGE>
4
5.1 Opinion of Shearman & Sterling, Counsel to the Registrant, as to the
validity of the Shares being registered.
23.1 Consent of Shearman & Sterling (included as part of Exhibit 5.1).
23.2 Consent of Coopers & Lybrand.
23.3 Consent of Deloitte & Touche LLP.
24 Powers of Attorney (included on signature page).
Item 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of securities registered hereby, a post-effective amendment
to this Registration Statement 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;
(2) That, for purposes of determining any liability under the
Securities Act of 1933, 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; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned Registrant hereby further 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 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) 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 the 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 whether such
<PAGE>
5
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Seattle, Washington, on this 10th day
of February, 1998.
Getty Images, Inc.
By: /s/Mark Getty
-----------------------------
Name: Mark Getty
Title: Co-Chairman
POWERS OF ATTORNEY
Each of the undersigned whose signature appears below hereby constitutes
and appoints Mark Getty, Mark Torrance and Jonathan Klein his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective
amendments) and supplements to this Registration Statement and any and all
related registration statements necessary to register additional securities,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
<PAGE>
6
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the indicated capacities on February 10, 1998.
Signature Title
- --------- -----
/s/Mark Getty Co-Chairman and Director
- -------------------------
Mark Getty
/s/ Mark Torrance Co-Chairman and Director
- -------------------------
Mark Torrance
/s/ Jonathan Klein Chief Executive Officer and
- ------------------------- Director (Principal Executive Officer)
Jonathan Klein
/s/ Lawrence Gould Treasurer (Principal Financial Office
- ------------------------- and Principal Accounting Officer)
Lawrence Gould
/s/ Andrew Garb Director
- -------------------------
Andrew Garb
/s/ Anthony Stone Director
- -------------------------
Anthony Stone
/s/ James Bailey Director
- -------------------------
James Bailey
/s/ Manny Fernandez Director
- -------------------------
Manny Fernandez
/s/ Christopher Sporborg Director
- -------------------------
Christopher Sporborg
<PAGE>
7
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF DOCUMENT
4.1 The Getty Images, Inc. 1998 Stock Incentive Plan.
4.2 The Getty Communications plc Executive Share Option Plan.
4.3 The PhotoDisc, Inc. 1994 Combined Incentive and Non-qualified Stock
Option Plan.
4.4 Form of Amended and Restated Certificate of Incorporation of Getty
Images (incorporated by reference from Amendment No. 5 to the
Registrant's Registration Statement on Form S-4 (No. 333-38777),
filed by the Registrant on January 7, 1998).
4.5 Form of Bylaws of Getty Images (incorporated by reference from
Amendment No. 5 to the Registrant's Registration Statement on
Form S-4 (No. 333-38777), filed by the Registrant on January 7, 1998).
5.1 Opinion of Shearman & Sterling, Counsel to the Registrant, as to the
validity of the Shares being registered.
23.1 Consent of Shearman & Sterling (included as part of Exhibit 5.1).
23.2 Consent of Coopers & Lybrand.
23.3 Consent of Deloitte & Touche LLP.
24 Powers of Attorney (included on signature page).
<PAGE>
EXHIBIT 4.1
<PAGE>
GETTY IMAGES, INC.
1998 STOCK INCENTIVE PLAN
(Adopted as of January 30, 1998)
<PAGE>
GETTY IMAGES, INC.
1998 STOCK INCENTIVE PLAN
1. PURPOSE. The purposes of the Getty Images, Inc. 1998 Stock
Incentive Plan (the "PLAN") are to attract, retain and motivate officers and
other key employees and consultants of GETTY IMAGES, INC., a Delaware
corporation (the "COMPANY"), and its Subsidiaries (as hereinafter defined), to
compensate them for their contributions to the growth and profits of the Company
and to encourage ownership by them of stock of the Company.
2. DEFINITIONS. For purposes of the Plan, the following terms shall
be defined as follows:
"ADMINISTRATOR" means the individual or individuals to whom the
Committee delegates authority under the Plan in accordance with Section
3(d).
"AFFILIATE" and "ASSOCIATE" have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act.
"AWARD" means an award made pursuant to the terms of the Plan to an
Eligible Individual in the form of Stock Options, Stock Appreciation
Rights, Stock Awards, Performance Share Awards, Section 162(m) Awards or
other awards determined by the Committee.
"AWARD AGREEMENT" means a written agreement or certificate granting an
Award. An Award Agreement shall be executed by an officer on behalf of the
Company and shall contain such terms and conditions as the Committee deems
appropriate and that are not inconsistent with the terms of the Plan. The
Committee may in its discretion require that an Award Agreement be executed
by the Participant to whom the relevant Award is made.
"BENEFICIAL OWNER" has the meaning ascribed to such term in Rule 13d-3
promulgated under the Exchange Act.
"BOARD" means the Board of Directors of the Company.
A "CHANGE IN CONTROL" of the Company shall be deemed to have occurred
when:
(a) any Person (other than the Company, any Subsidiary or
Affiliate of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any person or entity organized,
appointed or established by the Company or any Subsidiary of the
Company for or pursuant to the terms of any such plan), alone or
together with its Affiliates and
<PAGE>
2
Associates (collectively, an "ACQUIRING PERSON"), shall become the
Beneficial Owner of 33__ percent or more of the then outstanding
shares of Common Stock or the Combined Voting Power of the Company,
(b) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board, and any new
director (other than a director who is a representative or nominee of
an Acquiring Person) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least a majority of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved (collectively, the
"CONTINUING DIRECTORS"), cease for any reason to constitute a majority
of the Board,
(c) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the Surviving Entity (as defined in Section 16
hereof) or any Parent of such Surviving Entity) at least a majority of
the Combined Voting Power of the Company, such Surviving Entity or the
Parent of such Surviving Entity outstanding immediately after such
merger or consolidation, or
(d) the shareholders of the Company approve a plan of
reorganization (other than a reorganization under the United States
Bankruptcy Code) or complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets;
PROVIDED, HOWEVER, that a Change in Control shall not be deemed to have
occurred in the event of
(i) a sale or conveyance in which the Company continues as a
holding company of an entity or entities that conduct all or
substantially all of the business or businesses formerly conducted by
the Company, or
(ii) any transaction undertaken for the purpose of
incorporating the Company under the laws of another jurisdiction, if
such transaction does not materially affect the beneficial ownership
of the Company's capital stock.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
<PAGE>
3
"COMBINED VOTING POWER" means the combined voting power of the
Company's or other relevant entity's then outstanding voting securities.
"COMMITTEE" means the Compensation Committee of the Board, any
successor committee thereto or any other committee appointed by the Board
to administer the Plan.
"COMMON STOCK" means the Common Stock, par value $.01 per share, of
the Company.
"ELIGIBLE INDIVIDUALS" means the individuals described in Section 6
who are eligible to receive Awards under the Plan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the applicable rulings and regulations thereunder.
"FAIR MARKET VALUE" means, in the event the Common Stock is traded on
a recognized securities exchange or quoted by the National Association of
Securities Dealers Automated Quotations on National Market Issues, an
amount equal to the average of the high and low prices of the Common Stock
on such exchange or such quotation on the date set for valuation or, if no
sales of Common Stock were made on said exchange or so quoted on that date,
the average of the high and low prices of the Common Stock on the next
preceding day on which sales were made on such exchange or quotations; or,
if the Common Stock is not so traded or quoted, that value determined, in
its sole discretion, by the Committee. It is acknowledged that for
purposes of the grants of Awards made effective as of the consummation of
the proposed Merger and Scheme of Arrangement pursuant to which the
Company, as successor to Getty Communications, plc, will become the parent
of PhotoDisc, Inc., "Fair Market Value" shall be determined using the
market price of Getty Communications, plc, American Depository Shares as
quoted by the National Association of Securities Dealers Automated
Quotations on National Market Issues.
"INCENTIVE STOCK OPTION" means a Stock Option which is an "incentive
stock option" within the meaning of Section 422 of the Code and designated
by the Committee as an Incentive Stock Option in an Award Agreement.
"NONQUALIFIED STOCK OPTION" means a Stock Option which is not an
Incentive Stock Option.
"PARENT" means any corporation which is a "parent corporation" within
the meaning of Section 424(e) of the Code with respect to the relevant
entity.
<PAGE>
4
"PARTICIPANT" means an Eligible Individual to whom an Award has been
granted under the Plan.
"PERFORMANCE PERIOD" means a fiscal year of the Company or such other
period that may be specified by the Committee in connection with the grant
of a Section 162(m) Award.
"PERFORMANCE SHARE AWARD" means a conditional Award of shares of
Common Stock granted to an Eligible Individual pursuant to Section 11
hereof.
"PERSON" means any person, entity or "group" within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act.
"SECTION 162(m) PARTICIPANT" means, for a given fiscal year of the
Company, any Participant designated by the Committee by not later than 90
days following the start of such year as a Participant (or such other time
as may be required or permitted by Section 162(m) of the Code) whose
compensation for such fiscal year may be subject to the limit on deductible
compensation imposed by Section 162(m) of the Code.
"STOCK APPRECIATION RIGHT" means an Award to receive all or some
portion of the appreciation on shares of Common Stock granted to an
Eligible Individual pursuant to Section 9 hereof.
"STOCK AWARD" means an Award of shares of Common Stock granted to an
Eligible Individual pursuant to Section 10 hereof.
"STOCK OPTION" means an option to purchase shares of Common Stock
granted to an Eligible Individual pursuant to Section 8 hereof.
"SUBSIDIARY" means (i) any corporation which is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code with respect
to the Company or (ii) any other corporation or other entity in which the
Company, directly or indirectly, has an equity or similar interest and
which the Committee designates as a Subsidiary for the purposes of the
Plan.
"SUBSTITUTE AWARD" means an Award granted upon assumption of, or in
substitution for, outstanding equity awards previously granted by a company
or other entity in connection with a corporate transaction, such as a
merger, combination, consolidation or acquisition of property or stock.
3. ADMINISTRATION OF THE PLAN.
<PAGE>
5
(a) POWER AND AUTHORITY OF THE COMMITTEE. The Plan shall be
administered by the Committee, which shall have full power and authority,
subject to the express provisions hereof, (i) to select Participants from
the Eligible Individuals, (ii) to grant Awards in accordance with the Plan,
(iii) to determine the number of Shares subject to each Award or the cash
amount payable in connection with an Award, (iv) to determine the terms and
conditions of each Award, including, without limitation, those related to
vesting, forfeiture, payment and exercisability, and the effect, if any, of
a Participant's termination of employment with the Company or, subject to
Section 16 hereof, of a Change in Control on the outstanding Awards granted
to such Participant, and including the authority to amend the terms and
conditions of an Award after the granting thereof to a Participant in a
manner that is not prejudicial to the rights of such Participant, (v) to
specify and approve the provisions of the Award Agreements delivered to
Participants in connection with their Awards, (vi) to construe and
interpret any Award Agreement delivered under the Plan, (vii) to prescribe,
amend and rescind rules and procedures relating to the Plan, (viii) to vary
the terms of Awards to take account of tax, securities law and other
regulatory requirements of foreign jurisdictions, (ix) subject to the
provisions of the Plan and subject to such additional limitations and
restrictions as the Committee may impose, to delegate to one or more
officers of the Company some or all of its authority under the Plan, and
(x) to make all other determinations and to formulate such procedures as
may be necessary or advisable for the administration of the Plan.
(b) PLAN CONSTRUCTION AND INTERPRETATION. The Committee shall have
full power and authority, subject to the express provisions hereof, to
construe and interpret the Plan.
(c) DETERMINATIONS OF COMMITTEE FINAL AND BINDING. All
determinations by the Committee in carrying out and administering the Plan
and in construing and interpreting the Plan shall be final, binding and
conclusive for all purposes and upon all persons interested herein.
(d) DELEGATION OF AUTHORITY. The Committee may, but need not, from
time to time delegate some or all of its authority under the Plan to an
Administrator consisting of one or more members of the Committee or of one
or more officers of the Company; PROVIDED, HOWEVER, that the Committee may
not delegate its authority (i) to grant Awards to Eligible Individuals (A)
who are subject on the date of the grant to the reporting rules under
Section 16(a) of the Exchange Act, (B) who are Section 162(m) Participants
or (C) who are officers of the Company who are delegated authority by the
Committee hereunder, or (ii) under Sections 3(b) and 17 of the Plan. Any
delegation hereunder shall be subject to the restrictions and limits that
the Committee specifies at the time of such delegation or thereafter.
Nothing in the Plan shall be construed as obligating the Committee to
delegate authority to an Administrator, and the Committee may at any time
rescind the authority delegated to an Administrator appointed
<PAGE>
6
hereunder or appoint a new Administrator. At all times, the
Administrator appointed under this Section 3(d) shall serve in such
capacity at the pleasure of the Committee. Any action undertaken by the
Administrator in accordance with the Committee's delegation of authority
shall have the same force and effect as if undertaken directly by the
Committee, and any reference in the Plan to the Committee shall, to the
extent consistent with the terms and limitations of such delegation, be
deemed to include a reference to the Administrator.
(e) LIABILITY OF COMMITTEE. No member of the Committee shall be
liable for anything whatsoever in connection with the administration of the
Plan except such person's own willful misconduct. Under no circumstances
shall any member of the Committee be liable for any act or omission of any
other member of the Committee. In the performance of its functions with
respect to the Plan, the Committee shall be entitled to rely upon
information and advice furnished by the Company's officers, the Company's
accountants, the Company's counsel and any other party the Committee deems
necessary, and no member of the Committee shall be liable for any action
taken or not taken in reliance upon any such advice.
4. DURATION OF PLAN. The Plan shall remain in effect until
terminated by the Board of Directors and thereafter until all Awards granted
under the Plan are satisfied by the issuance of shares of Common Stock or the
payment of cash or are terminated under the terms of the Plan or under the Award
Agreement entered into in connection with the grant thereof. Notwithstanding
the foregoing, no Awards may be granted under the Plan after the tenth
anniversary of the Effective Date (as defined in Section 18(j)).
5. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to adjustment as
provided in Section 15(b) hereof, the number of shares of Common Stock that may
be issued under the Plan pursuant to Awards shall not exceed, in the aggregate,
10,000,000 shares (the "SECTION 5 LIMIT"), of which the number of shares of
Common Stock that may be issued under the Plan pursuant to Incentive Stock
Options may not exceed, in the aggregate, 9,000,000 shares. Such shares may be
either authorized but unissued shares, treasury shares or any combination
thereof. For purposes of determining the number of shares that remain available
for issuance under the Plan, the following rules shall apply:
(a) the number of Shares subject to outstanding Awards shall be
charged against the Section 5 Limit; and
(b) the Section 5 Limit shall be increased by:
(i) the number of shares subject to an Award (or portion
thereof) which lapses, expires or is otherwise terminated without the
issuance of such shares or is settled by the delivery of consideration
other than shares,
<PAGE>
7
(ii) the number of shares tendered to pay the exercise price of a
Stock Option or other Award, and
(iii) the number of shares withheld from any Award to satisfy
a Participant's tax withholding obligations or, if applicable, to pay
the exercise price of a Stock Option or other Award.
In addition, any shares underlying Substitute Awards shall not be counted
against the Section 5 Limit set forth in the first sentence of this Section 5.
6. ELIGIBLE INDIVIDUALS.
(a) ELIGIBILITY CRITERIA. Awards may be granted by the Committee to
individuals ("ELIGIBLE INDIVIDUALS") who are officers or other key
employees or consultants of the Company or a Subsidiary with the potential
to contribute to the future success of the Company or its Subsidiaries.
Members of the Committee shall not be eligible to receive Awards under the
Plan. An individual's status as an Administrator will not affect his or
her eligibility to participate in the Plan.
(b) MAXIMUM NUMBER OF SHARES PER ELIGIBLE INDIVIDUAL. In accordance
with the requirements under Section 162(m) of the Code, no Eligible
Individual shall receive grants of Awards with respect to an aggregate of
more than 4,500,000 shares of Common Stock in respect of any fiscal year of
the Company. For purposes of the preceding sentence, any Award that is
made as bonus compensation, or is made in lieu of compensation that
otherwise would be payable to an Eligible Individual, shall be considered
made in respect of the fiscal year to which such bonus or other
compensation relates or otherwise was earned.
7. AWARDS GENERALLY. Awards under the Plan may consist of Stock
Options, Stock Appreciation Rights, Stock Awards, Performance Share Awards,
Section 162(m) Awards or other awards determined by the Committee. The terms
and provisions of an Award shall be set forth in a written Award Agreement
approved by the Committee and delivered or made available to the Participant as
soon as practicable following the date of the Award. The vesting,
exercisability, payment and other restrictions applicable to an Award (which may
include, without limitation, restrictions on transferability or provision for
mandatory resale to the Company) shall be determined by the Committee and set
forth in the applicable Award Agreement. Notwithstanding the foregoing, the
Committee may accelerate (i) the vesting or payment of any Award, (ii) the lapse
of restrictions on any Award or (iii) the date on which any Option or Stock
Appreciation Right first becomes exercisable. The date of a Participant's
termination of employment for any reason shall be determined in the sole
discretion of the Committee. The Committee shall also have full authority to
determine and specify in the applicable Award Agreement the effect, if any, that
a Participant's termination of employment for any reason will have on the
vesting, exercisability, payment or lapse of restrictions applicable to an
outstanding Award.
<PAGE>
9
8. STOCK OPTIONS.
(a) TERMS OF STOCK OPTIONS GENERALLY. Subject to the terms of the
Plan and the applicable Award Agreement, each Stock Option shall entitle
the Participant to whom such Stock Option was granted to purchase the
number of shares of Common Stock specified in the applicable Award
Agreement and shall be subject to the terms and conditions established by
the Committee in connection with the Stock Option and specified in the
applicable Award Agreement. Upon satisfaction of the conditions to
exercisability specified in the applicable Award Agreement, a Participant
shall be entitled to exercise the Stock Option in whole or in part and to
receive, upon satisfaction or payment of the exercise price or an
irrevocable notice of exercise in the manner contemplated by Section 8(d)
below, the number of shares of Common Stock in respect of which the Stock
Option shall have been exercised. Stock Options may be either Nonqualified
Stock Options or Incentive Stock Options.
(b) EXERCISE PRICE. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at
the time of grant and set forth in the Award Agreement, PROVIDED, that the
exercise price per share of any Incentive Stock Option shall be no less
than 100% of the Fair Market Value per share on the date of grant.
Notwithstanding the foregoing, the exercise price per share of a Stock
Option that is a Substitute Award may be less than the Fair Market Value
per share on the date of grant, PROVIDED that the excess of:
(i) the aggregate Fair Market Value (as of the date such
Substitute Award is granted) of the shares subject to the
Substitute Award, over
(ii) the aggregate exercise price thereof,
does not exceed the excess of:
(iii) the aggregate fair market value (as of the time immediately
preceding the transaction giving rise to the Substitute Award,
such fair market value to be determined by the Committee) of the
shares of the predecessor entity that were subject to the grant
assumed or substituted for by the Company, over
(iv) the aggregate exercise price of such shares.
(c) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee and set forth in the Award Agreement; PROVIDED, HOWEVER, that a
Stock Option shall not be exercisable after the expiration of ten (10)
years after the date the Stock Option is granted.
<PAGE>
10
(d) METHOD OF EXERCISE. Subject to the provisions of the applicable
Award Agreement, the exercise price of a Stock Option may be paid in cash
or previously owned shares or a combination thereof and, if the applicable
Award Agreement so provides, in whole or in part through the withholding of
shares subject to the Stock Option with a value equal to the exercise
price. In accordance with the rules and procedures established by the
Committee for this purpose, the Stock Option may also be exercised through
a "cashless exercise" procedure approved by the Committee involving a
broker or dealer approved by the Committee, that affords Participants the
opportunity to sell immediately some or all of the shares underlying the
exercised portion of the Stock Option in order to generate sufficient cash
to pay the Stock Option exercise price and/or to satisfy withholding tax
obligations related to the Stock Option.
9. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall be
subject to the terms and conditions established by the Committee in connection
with the Award thereof and specified in the applicable Award Agreement. Upon
satisfaction of the conditions to the payment specified in the applicable Award
Agreement, each Stock Appreciation Right shall entitle a Participant to an
amount, if any, equal to the Fair Market Value of a share of Common Stock on the
date of exercise over the Stock Appreciation Right exercise price specified in
the applicable Award Agreement. At the discretion of the Committee, payments to
a Participant upon exercise of a Stock Appreciation Right may be made in Shares,
cash or a combination thereof. A Stock Appreciation Right may be granted alone
or in addition to other Awards, or in tandem with a Stock Option. If granted in
tandem with a Stock Option, a Stock Appreciation Right shall cover the same
number of shares of Common Stock as covered by the Stock Option (or such lesser
number of shares as the Committee may determine) and shall be exercisable only
at such time or times and to the extent the related Stock Option shall be
exercisable, and shall have the same term and exercise price as the related
Stock Option. Upon exercise of a Stock Appreciation Right granted in tandem
with a Stock Option, the related Stock Option shall be canceled automatically to
the extent of the number of shares covered by such exercise; conversely, if the
related Stock Option is exercised as to some or all of the shares covered by the
tandem grant, the tandem Stock Appreciation Right shall be canceled
automatically to the extent of the number of shares covered by the Stock Option
exercised.
10. STOCK AWARDS. Stock Awards shall consist of one or more shares
of Common Stock granted or offered for sale to an Eligible Individual, and shall
be subject to the terms and conditions established by the Committee in
connection with the Award and specified in the applicable Award Agreement. The
shares of Common Stock subject to a Stock Award may, among other things, be
subject to vesting requirements or restrictions on transferability.
11. PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
evidenced by an Award Agreement in such form and containing such terms and
conditions as the Committee deems appropriate and which are not inconsistent
with the terms of the Plan. Each Award Agreement shall set forth the number of
shares of Common Stock to be earned by
<PAGE>
11
a Participant upon satisfaction of certain specified performance criteria and
subject to such other terms and conditions as the Committee deems
appropriate. Payment in settlement of a Performance Share Award shall be made
as soon as practicable following the conclusion of the applicable performance
period, or at such other time as the Committee shall determine, in shares of
Common Stock, in an equivalent amount of cash or in a combination of Common
Stock and cash, as the Committee shall determine.
12. OTHER AWARDS. The Committee shall have the authority to specify
the terms and provisions of other forms of equity-based or equity-related Awards
not described above which the Committee determines to be consistent with the
purpose of the Plan and the interests of the Company, which Awards may provide
for cash payments based in whole or in part on the value or future value of
Common Stock, for the acquisition or future acquisition of Common Stock, or any
combination thereof. Other Awards shall also include cash payments (including
the cash payment of dividend equivalents) under the Plan which may be based on
one or more criteria determined by the Committee which are unrelated to the
value of Common Stock and which may be granted in tandem with, or independent
of, other Awards under the Plan.
13. SECTION 162(m) AWARDS.
(a) TERMS OF SECTION 162(m) AWARDS GENERALLY. In addition to any
other Awards under the Plan, the Company may make Awards that are intended
to qualify as "qualified performance-based compensation" for purposes of
Section 162(m) of the Code ("SECTION 162(m) AWARDS"). Section 162(m)
Awards may consist of Stock Options, Stock Appreciation Rights, Stock
Awards, Performance Share Awards or Other Awards the vesting,
exercisability and/or payment of which is conditioned upon the attainment
for the applicable Performance Period of specified performance targets
related to designated performance goals for such period selected by the
Committee from among the performance goals specified in Section 13(b)
below. Section 162(m) Awards will be made in accordance with the
procedures specified in applicable Treasury regulations for compensation
intended to be "qualified performance-based compensation."
(b) PERFORMANCE GOALS. For purposes of this Section 13, performance
goals shall be limited to one or more of the following: (i) net revenue,
(ii) net earnings, (iii) operating earnings or income, (iv) absolute and/or
relative return on equity or assets, (v) earnings per share, (vi) cash
flow, (vii) pretax profits, (viii) earnings growth, (ix) revenue growth,
(x) book value per share, (xi) stock price and (xii) performance relative
to peer companies, each of which may be established on a corporate-wide
basis or established with respect to one or more operating units,
divisions, acquired businesses, minority investments, partnerships or joint
ventures.
<PAGE>
12
(c) OTHER PERFORMANCE-BASED COMPENSATION. The Committee's decision
to make, or not to make, Section 162(m) Awards within the meaning of this
Section 13 shall not in any way prejudice the qualification of any other
Awards as performance-based compensation under Section 162(m). In
particular, Awards of Stock Options may, pursuant to applicable regulations
promulgated under Section 162(m), be qualified as performance-based
compensation for Section 162(m) purposes without regard to this Section 13.
14. NON-TRANSFERABILITY. No Award granted under the Plan or any
rights or interests therein shall be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of except by will or by the laws of descent and
distribution or pursuant to a "qualified domestic relations order" ("QDRO") as
defined in the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations thereunder; PROVIDED, HOWEVER,
that the Committee may, subject to such terms and conditions as the Committee
shall specify, permit the transfer of an Award to a Participant's family members
or to one or more trusts or partnerships established in whole or in part for the
benefit of one or more of such family members; PROVIDED FURTHER, that the
restrictions in this sentence shall not apply to the shares received in
connection with an Award after the date that the restrictions on transferability
of such shares set forth in the applicable Award Agreement have lapsed. During
the lifetime of a Participant, a Stock Option or Stock Appreciation Right shall
be exercisable only by, and payments in settlement of Awards shall be payable
only to, the Participant or, if applicable, the "alternate payee" under a QDRO
or the family member or trust to whom such Stock Option, Stock Appreciation
Right or other Award has been transferred in accordance with the previous
sentence.
15. RECAPITALIZATION OR REORGANIZATION.
(a) AUTHORITY OF THE COMPANY AND SHAREHOLDERS. The existence of the
Plan, the Award Agreements and the Awards granted hereunder shall not
affect or restrict in any way the right or power of the Company or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any
issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Common Stock or the rights thereof or which are
convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise.
(b) CHANGE IN CAPITALIZATION. Notwithstanding any provision of the
Plan or any Award Agreement, in the event of any change in the outstanding
Common Stock by reason of a stock dividend, recapitalization,
reorganization, merger, consolidation, stock split, combination or exchange
of shares affecting the Common Stock, the
<PAGE>
13
Committee shall make (i) such proportionate adjustments it considers
appropriate (in the form determined by the Committee in its sole
discretion) to prevent diminution or enlargement of the rights of
Participants under the Plan with respect to the aggregate number of
shares of Common Stock for which Awards in respect thereof may be
granted under the Plan, the number of shares of Common Stock covered by
each outstanding Award, and the exercise prices in respect thereof
and/or (ii) such other equitable adjustments as it deems appropriate in
the interests of the holders of Awards. The Committee's determination
as to what, if any, adjustments shall be made shall be final and binding
on the Company and all Participants.
16. CHANGE IN CONTROL. In the event of a Change in Control and
except as the Committee (as constituted immediately prior to such Change in
Control) may otherwise determine in its sole discretion, (i) all Stock Options
or Stock Appreciation Rights then outstanding shall become fully exercisable as
of the date of the Change in Control, whether or not then exercisable, (ii) all
restrictions and conditions of all Stock Awards then outstanding shall lapse as
of the date of the Change in Control, (iii) all Performance Share Awards shall
be deemed to have been fully earned as of the date of the Change in Control. In
the case of a Change in Control involving a merger of, or consolidation
involving, the Company in which the Company is (A) not the surviving corporation
(the "SURVIVING ENTITY") or (B) becomes a wholly owned subsidiary of the
Surviving Entity or any Parent thereof, each outstanding Stock Option granted
under the Plan and not exercised (a "PREDECESSOR OPTION") will be converted into
an option (a "SUBSTITUTE OPTION") to acquire common stock of the Surviving
Entity or its Parent, which Substitute Option will have substantially the same
terms and conditions as the Predecessor Option, with appropriate adjustments as
to the number and kind of shares and exercise prices.
17. AMENDMENT OF THE PLAN. The Board or Committee may at any time
and from time to time terminate, modify, suspend or amend the Plan in whole or
in part; PROVIDED, HOWEVER, that no such termination, modification, suspension
or amendment shall be effective without shareholder approval if such approval is
required to comply with any applicable law or stock exchange rule; and PROVIDED
FURTHER, that the Board or Committee may not, without shareholder approval,
increase the maximum number of shares issuable under the Plan. No termination,
modification, suspension or amendment of the Plan shall, without the consent of
a Participant to whom any Award shall previously have been granted, adversely
affect his or her rights under such Awards. Notwithstanding any provision
herein to the contrary, the Board or Committee shall have broad authority to
amend the Plan or any Award to take into account changes in applicable tax laws,
securities laws, accounting rules and other applicable state and federal laws.
18. MISCELLANEOUS.
(a) TAX WITHHOLDING. No later than the date as of which an amount
first becomes includable in the gross income of the Participant for
applicable income tax
<PAGE>
14
purposes with respect to any grant under the Plan, the Participant shall
pay to the Company or make arrangements satisfactory to the Committee
regarding the payment of any federal, state or local taxes of any kind
required by law to be withheld with respect to such amount. Unless
otherwise determined by the Committee, in accordance with rules and
procedures established by the Committee, the minimum required
withholding obligations may be settled with Common Stock, including
Common Stock that is part of the grant that gives rise to the
withholding requirement. The obligation of the Company under the Plan
shall be conditioned upon such payment or arrangements and the Company
shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to the Participant.
(b) NO RIGHT TO GRANTS OR EMPLOYMENT. No Eligible Individual or
Participant shall have any claim or right to receive grants of Awards under
the Plan. Nothing in the Plan or in any Award Agreement shall confer upon
any employee of the Company or any Subsidiary any right to continued
employment with the Company or any Subsidiary, as the case may be, or
interfere in any way with the right of the Company or a Subsidiary to
terminate the employment of any of its employees at any time, with or
without cause.
(c) UNFUNDED PLAN. The Plan is intended to constitute an unfunded
plan for incentive compensation. With respect to any payments not yet made
to a Participant by the Company, nothing contained herein shall give any
such Participant any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Common Stock or payments in
lieu thereof with respect to grants hereunder.
(d) OTHER EMPLOYEE BENEFIT PLANS. Amounts received by a Participant
with respect to any Award made pursuant to the provisions of the Plan shall
not be included in, nor have any effect on, the determination of benefits
under any other employee benefit plan or similar arrangement provided by
the Company.
(e) SECURITIES LAW RESTRICTIONS. The Committee may require each
Eligible Individual purchasing or acquiring shares of Common Stock pursuant
to a Stock Option or other Award under the Plan to represent to and agree
with the Company in writing that such Eligible Individual is acquiring the
shares for investment and not with a view to the distribution thereof. All
certificates for shares of Common Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, the National
Association of Securities Dealers Automated Quotation System or any other
exchange upon which the Common Stock is then listed, and any applicable
federal or state securities law, and the Committee may cause a legend or
legends to be put on any such certificates to make
<PAGE>
15
appropriate reference to such restrictions. No shares of Common Stock
shall be issued hereunder unless the Company shall have determined that
such issuance is in compliance with, or pursuant to an exemption from,
all applicable federal and state securities laws.
(f) COMPLIANCE WITH RULE 16b-3.
(i) The Plan is intended to comply with Rule 16b-3 under
the Exchange Act or its successors under the Exchange Act and the
Committee shall interpret and administer the provisions of the Plan or
any Award Agreement in a manner consistent therewith. To the extent
any provision of the Plan or Award Agreement or any action by the
Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
Moreover, in the event the Plan or an Award Agreement does not include
a provision required by Rule 16b-3 to be stated therein, such
provision (other than one relating to eligibility requirements, or the
price and amount of Awards) shall be deemed automatically to be
incorporated by reference into the Plan or such Award Agreement
insofar as Participants subject to Section 16 of the Exchange Act are
concerned.
(ii) Notwithstanding anything contained in the Plan or any
Award Agreement to the contrary, if the consummation of any
transaction under the Plan would result in the possible imposition of
liability on a Participant pursuant to Section 16(b) of the Exchange
Act, the Committee shall have the right, in its sole discretion, but
shall not be obligated, to defer such transaction to the extent
necessary to avoid such liability.
(g) AWARD AGREEMENT. In the event of any conflict or inconsistency
between the Plan and any Award Agreement, the Plan shall govern, and the
Award Agreement shall be interpreted to minimize or eliminate any such
conflict or inconsistency.
(h) EXPENSES. The costs and expenses of administering the Plan shall
be borne by the Company.
(i) APPLICABLE LAW. Except as to matters of federal law, the Plan
and all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
conflicts of law principles.
(j) EFFECTIVE DATE. The Plan shall be effective as of the date (the
"EFFECTIVE DATE") of the consummation of the proposed Merger and Scheme of
Arrangement pursuant to which the Company, as successor to Getty
Communications, plc, will become the parent of PhotoDisc, Inc., contingent
upon its prior approval by the shareholders of each of Getty
Communications, plc and PhotoDisc, Inc. If shareholder
<PAGE>
16
approval is not obtained at or prior to the first annual meeting of the
shareholders of the Company to occur after the adoption of the Plan by
the Board, the Plan and any Awards granted thereunder shall terminate AB
INITIO and be of no further force and effect.
<PAGE>
GETTY IMAGES, INC.
1998 U.K. STOCK OPTION SCHEME
CLIFFORD CHANCE
200 Aldersgate Street
LONDON
EC1A 4JJ
Inland Revenue Ref. No.: X19186
<PAGE>
TABLE OF CONTENTS
1. Definitions and Interpretation. . . . . . . . . . . . . . . . . . . . .1
2. Applicability of the U.S. Plan. . . . . . . . . . . . . . . . . . . . .2
3. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
4. Grant of Options. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
5. Exercise Price and Consideration. . . . . . . . . . . . . . . . . . . .4
6. Exercise of Options . . . . . . . . . . . . . . . . . . . . . . . . . .4
7. Adjustments upon Changes in Capitalization or Merger. . . . . . . . . .5
8. Amendment and Termination of the U.K. Scheme. . . . . . . . . . . . . .6
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
<PAGE>
GETTY IMAGES, INC.
1998 U.K. STOCK OPTION SCHEME
SCHEDULE TO THE GETTY IMAGES, INC. 1998 STOCK INCENTIVE PLAN
1. DEFINITIONS AND INTERPRETATION
1. Unless the context otherwise requires, all expressions defined in
the U.S. Plan shall have the same meaning in the U.K. Scheme, save
that:
"Fair Market Value" has the meaning set forth in sub-rule
5(3); and
"Option" includes an Approved Stock Option as defined in
sub-rule 1(2).
2. In addition, the following expressions shall have the following
meanings in the U.K. Scheme unless the context otherwise
requires:
"Approved Stock Option" means an Option granted in
accordance with the U.K. Scheme;
"Grant Date" means, in relation to an option, the date on
which the option was granted;
"the Inland Revenue" means the United Kingdom's
Commissioners of Inland Revenue;
"Participating Company" means the Company or a Subsidiary of
the Company;
"the U.K. Scheme" means the Getty Images, Inc. 1998 U.K.
Stock Option Scheme as herein set out, but subject to any
alterations or additions made under Rule 8 below;
"Schedule 9" means Schedule 9 to the Taxes Act;
"Subsidiary" shall mean a body corporate, whether now or
hereafter existing which is:
1. a subsidiary of the company within the meaning of Section
736 of the United Kingdom Companies Act 1985; and is
<PAGE>
2. under the control of the Company within the meaning of
Section 840 of the Taxes Act.
"the Taxes Act" means the United Kingdom's Income and
Corporation Taxes Act 1988; and
"the U.S. Plan" means the Getty Images, Inc. 1998 Stock
Incentive Plan.
3. Expressions not otherwise defined herein have the same meanings as
they have in Schedule 9.
4. Any reference herein to any enactment includes a reference to that
enactment as from time to time modified, extended or re-enacted.
2. APPLICABILITY OF THE U.S. PLAN
1. Save as hereinafter specified, all the terms and provisions of the U.S.
Plan shall apply MUTATIS MUTANDIS to the grant of Approved Stock
Options under the U.K. Scheme.
3. ELIGIBILITY
1. Subject to sub-rule (3) below, a person is eligible to be granted an
Approved Stock Option if (and only if) he is a full-time
director or qualifying employee of a Participating Company.
2. For the purposes of sub-rule (1) above:
1. a person shall be treated as a full-time director of a
Participating Company if he is obliged to devote to the
performance of the duties of his office or employment
with that and any other Participating Company not less
than 25 hours a week (excluding meal breaks):
2. a qualifying employee, in relation to a Participating Company,
is an employee of the Participating Company (other than
one who is a director of a Participating Company).
3. A person is not eligible to be granted an Option under the U.K.
Scheme at any time when he is not eligible to participate in
the U.K. Scheme by virtue of paragraph 8 of Schedule 9.
<PAGE>
3
4. GRANT OF OPTIONS
1. Subject to sub-rule (3) below, the Committee may grant to any person
who is eligible to be granted an Option under the U.K. Scheme
an Approved Stock Option to acquire shares which satisfy the
requirements of paragraphs 10 to 14 of Schedule 9, upon the
terms set out in the U.K. Scheme and upon such other
objective terms as the Committee may reasonably specify.
2. The grant of an Approved Stock Option shall be subject to obtaining
any approval or consent which may be required under the
provisions of any regulation or enactment.
3. No person shall be granted Approved Stock Options under the U.K.
Scheme which would, at the time they are granted, cause the
aggregate market value of the shares which he may acquire in
pursuance of options granted to him under the U.K. Scheme or
under any other share option scheme, not being a
savings-related share option scheme, approved under Schedule
9 and established by the Company or by any associated company
of the Corporation (and not exercised) to exceed or further
exceed L30,000.
4. For the purposes of sub-rule (3) above:
1. in the case of an Option granted under the U.K. Scheme the
aggregate value of the shares shall be calculated as on
the day by reference to which the price at which shares
may be acquired by the exercise thereof is determined as
mentioned in Rule 5(2) below;
2. in the case of an Option granted under any other approved
scheme, as at the time when it was granted or, in a case
where an agreement relating to the shares has been made
under paragraph 29 of Schedule 9, such earlier time or
times as may be provided in the agreement; and
3. in the case of any other Option, the aggregate fair market value
of shares shall be calculated as on the day or days by
reference to which the price at which shares may be
acquired by the exercise hereof was determined.
5. Unless otherwise agreed with the Inland Revenue, the United States
dollar exchange rate for pounds sterling for the purposes of
calculating the limit in sub-rule (3) above shall be the noon
buying rate in the City of London on the day by reference to
which the price at which shares may be
<PAGE>
4
acquired on the exercise of the Option is determined as
mentioned in Rule 5(2) below.
5. EXERCISE PRICE AND CONSIDERATION
1. Shares shall be issued to the Participant pursuant to the exercise
of an Option only upon receipt by the Company from the
Participant of payment in full in cash.
2. The price per share under each Approved Stock Option granted by the
Committee shall be such price as is determined by the
Committee before the grant thereof, provided that it shall
not be less than 100% of the Fair Market Value per share on
the Grant Date (or such other dealing day as may be agreed
with the Inland Revenue).
3. The Fair Market Value per share on any day shall be equal to the
market value (within the meaning of Part VIII of the United
Kingdom's Capital Gains Tax Act 1992) of shares, as agreed in
advance for the purposes of the U.K. Scheme with the Shares
Valuation Division of the Inland Revenue, on that day.
6. EXERCISE OF OPTIONS
1. A person is not eligible to exercise an Approved Stock Option
granted under the U.K. Scheme at any time when he is not
eligible to participate in the U.K. Scheme by virtue of
paragraph 8 of Schedule 9.
2. An Approved Stock Option may not be exercised before the third
anniversary of the Grant Date save that if the Participant
ceases to be a director or employee of a Participating
Company (otherwise than by reason of his death), the
following provisions apply:
1. if he so ceases by reason of injury, disability, redundancy
(within the meaning of the Employment Rights Act 1996) or
retirement on reaching the age at which he is bound to
retire in accordance with the terms of his contract of
employment, or by reason only that his office or
employment is in a company which ceases to be a
Participating Company, or relates to a business or part
of a business which is transferred to a person who is not
a Participating Company, the Approved Stock Option may
(and subject to paragraph 6(3) below must, if at all) be
exercised within the period
<PAGE>
5
which shall expire 12 months after his so ceasing, 42 months
after the Grant Date, or 42 months after the last date
prior to his so ceasing on which he exercised an option
(not being one granted under a savings-related share
option scheme) in circumstances in which paragraphs (a)
and (b) of section 185(3) of the Taxes Act 1988 applied,
whichever shall be the latest; and
i. if he so ceases for any other reason, the Approved
Stock Option may not be exercised at all unless the
Board shall so permit, in which event it may (and
subject to paragraph 6(3) must, if at all) be
exercised to the extent permitted by the Board within
the period mentioned in paragraph (a) above.
3. An Approved Stock Option granted under the UK Scheme may (and must,
if at all) be exercised by a Participant's personal
representatives within twelve (12) months after the death of
the Participant.
4. Paragraphs 7(c) and (d) of the U.S. Plan shall apply in respect of
Approved Stock Options granted under the UK Scheme.
5. In the event of a Change in Control all Approved Stock Options then
outstanding shall become fully exercisable for one month (or
such longer period as the Committee may permit) as of the
date of the Change of Control, whether or not then
exercisable, and shall thereafter lapse.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
1. Paragraph 9 of the U.S. Plan shall apply to Approved Stock Options
granted under the U.K. Scheme in respect of a variation of
capital of the Company only, save that no adjustment under
Paragraph 9 shall be made to an Approved Stock Option at a
time when the UK Scheme is approved by the Inland Revenue
under Schedule 9 without the prior approval of the Inland
Revenue.
2. If any company ("the acquiring company") obtains control of the
Company as a result of making
1. a general offer to acquire the whole of the Common Stock of the
Company which is made on a condition such that if it is
satisfied the person making the offer will have control
of the Company; or
<PAGE>
6
2. a general offer to acquire all the shares in the Company which
are of the same class as the shares which may be acquired
by the exercise of Options granted under the U.K. Scheme,
any Participant may at any time within the appropriate period (which
expression shall be construed in accordance with paragraph 15(2) of
Schedule 9), by agreement with the acquiring company, release any
Option granted under the U.K. Scheme which has not lapsed ("the old
option") in consideration of the grant to him of an option ("the new
option") which (for the purposes of that paragraph) is equivalent to
the old option but relates to shares in a different company (whether
the acquiring company itself or some other company falling within
paragraph 10(b) or (c) of Schedule 9).
3. The new option shall not be regarded for the purposes of sub-rule
(2) above as equivalent to the old option unless the
conditions set out in paragraph 15(3) of Schedule 9 are
satisfied, but so that the provisions of the U.K. Scheme
shall for this purpose be construed as if:
1. the new option were an Option granted under the U.K. Scheme at
the same time as the old option; and
2. except for the purposes of the definitions of "Participating
Company" and "Subsidiary" in Rule 1 above and the
reference to "the Committee" in Rule 4(1) above, the
reference to Getty Images, Inc. in the definition of
"Company" in Paragraph 1 of the U.S. Plan were a
reference to the different company mentioned in sub-rule
(2) above.
8. AMENDMENT AND TERMINATION OF THE U.K. SCHEME
1. Paragraph 1l of the U.S. Plan shall apply MUTATIS MUTANDIS to the
U.K. Scheme, save that if an amendment is made to the U.K.
Scheme or to the terms of an Approved Stock Option at a time
when the U.K. Scheme is approved by the Inland Revenue under
Schedule 9, the approval will not thereafter have effect
unless the Inland Revenue has approved the alteration or
addition.
2. As soon as reasonably practicable after making any amendment to the
U.K. Scheme under sub-rule (1) above, the Committee shall
give notice in writing thereof to any Participant affected
thereby and, if the U.K. Scheme is then approved by the
Inland Revenue under Schedule 9, to the Inland Revenue.
<PAGE>
7
3. In accordance with the Committees' powers under Paragraph 3 of the
U.S. Plan, the Committee shall if it deems necessary delegate
authority to any one or more of the officers of the Company
to be responsible for the administration of the U.K. Scheme.
9. MISCELLANEOUS
1. Options granted under the U.K. Scheme shall not be transferable or
assignable other than by will or by the laws of descent and
distribution and Paragraph 8 of the U.S. Plan shall only
apply to Options granted under the U.K. Scheme in this
respect.
2. Within thirty days after an Option has been exercised by any person,
the Committee on behalf of the Company shall allot to him or,
as appropriate, procure the transfer to him of the number of
shares in respect of which the Option has been exercised.
3. All shares allotted under the U.K. Scheme shall rank PARI PASSU in
all respects with the shares of the same class for the time
being in issue, save as regards any rights attaching to such
shares by reference to a record date prior to the date of the
allotment.
CLIFFORD CHANCE
200 Aldersgate Street
LONDON
EC1A 4JJ
Tel. 071 600 0000
Fax 071 600 5555
<PAGE>
EXHIBIT 4.2
<PAGE>
THE GETTY COMMUNICATIONS EXECUTIVE SHARE OPTION PLAN
APPROVED BY THE BOARD ON 30 MAY 1996
ADOPTED WITH EFFECT FROM 8 JULY 1996
AMENDED BY THE BOARD ON 20 AUGUST 1997 AND FEBRUARY 1998
CLIFFORD CHANCE
200 Aldersgate Street
London EC1A 4JJ
Tel: 44 171 600 1000
Fax: 44 171 600 5555
Ref: MSF/G2382/19
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C> <C>
PART A: UNAPPROVED OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1. Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . .1
2. Grant of Options, Plan Limits and Exercise Price . . . . . . . . . . . . .2
3. Exercise of Options. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
4. Cash Equivalent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5. Takeover, Reconstruction, Winding-up and Listing . . . . . . . . . . . . .6
6. Variation of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7. Alterations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
8. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
9. Incentive Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . 10
PART B: APPROVED OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE>
PART A: UNAPPROVED OPTIONS
1. DEFINITIONS AND INTERPRETATION
(1) In this Plan, unless the context otherwise requires:-
"BOARD" means the board of directors of the Company or a committee
appointed by such board of directors;
"CODE" means the United States Internal Revenue Code of 1986 (as amended);
"COMPANY" means Getty Communications plc (registered in England and Wales
No. 3005770);
"FIVE YEAR VESTED OPTIONS" mean Premium Options that were not vested at the
fourth anniversary of their date of grant but have vested at the fifth
anniversary of the date of grant;
"FOUR YEAR VESTED OPTIONS" mean Premium Options that were not vested at the
third anniversary of their date of grant but have vested at the fourth
anniversary of the date of grant;
"GRANT DATE" in relation to an option means the date on which the option
was granted;
"INCENTIVE STOCK OPTION" means an option satisfying the requirements of
Section 412 of the Code;
"MARKET OPTIONS" means options granted to acquire shares in the Company at
Market Value;
"MARKET VALUE" at the date of grant of any option means the fair market
value of shares in the Company on that date as determined by the Board;
"PARTICIPANT" means a person who holds an option granted under the Plan;
"PARTICIPATING COMPANY" means the Company or any Subsidiary or any company
which is not under the control of any single person, but is under the
control of two persons, one of them being the Company, and for this purpose
"CONTROL" has the same meaning as in Section 840 of the Income and
Corporation Taxes Act 1988;
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<PAGE>
"PLAN" means the Getty Communications Executive Share Option Plan as herein
set out but subject to any alterations or addition made under Rule 7 below;
"PREMIUM OPTIONS" means options granted to acquire shares in the Company at
Premium Value;
"PREMIUM VALUE" at the date of any grant of any option means the Market
Value of shares in the Company on that date plus an amount equal to the
Rate of Return on that Market Value compounded over five years;
"RATE OF RETURN" at any date mens the annual rate of return on the basis of
which the Premium Value will be calculated, such Rate of Return being 10%;
"SHARES" means ordinary "Class A" shares of the Company;
"SUBSIDIARY" means a body corporate which is a subsidiary of the Company
within the meaning of section 736 of the Companies Act 1985;
"THREE YEAR VESTED OPTIONS" means Premium Options that have vested at the
third anniversary of their date of grant;
and any provisions relating to any employee shall apply, mutatis mutandis,
to a consultant.
(2) Any reference in the Plan to any enactment includes a reference to that
enactment as from time to time modified extended or re-enacted.
2. GRANT OF OPTIONS, PLAN LIMITS AND EXERCISE PRICE
(1) Subject to sub-rule (2) below the Board may grant to any director or
employee or consultant of a Participating Company an option under Part A to
acquire shares in the Company, upon the terms set out in the Plan and upon
such other terms as the Board may specify; and for this purpose an option
to acquire includes an option to purchase and an option to subscribe. The
Board may only grant Market Options where it at the same time grants
Premium Options to the same person.
(2) No options shall be granted under the Plan which would, at the time they
are granted, cause the number of shares in respect of which options have
been granted (disregarding options which have lapsed) to exceed 6,159,900
shares.
(3) The price at which shares may be acquired by the exercise of an option
granted under the Plan shall be determined by the Board before the grant
thereof, but shall not be less than Market Value at the date of grant in
respect of Market Options and shall be not less than
-2-
<PAGE>
Premium Value at the date of grant in respect of Premium Options and
shall not, except in the case of an option to acquire shares otherwise
than by subscription, be less than the nominal value of those shares.
For the purpose of determining the fair market value of shares of the
Company, the following rules shall apply:
(a) If the shares are at the time listed or admitted to trading on any
stock exchange, then the fair market value shall be the closing price
of the shares on the date in question on the principal exchange on
which the shares are then listed or admitted to trading. If no
reported sale of the shares takes place on the date in question on the
principal exchange, then the fair market value shall be determined as
of the closest preceding date on which such principal exchange shall
have been open for business and shares were traded.
(b) If the shares are not at the time listed or admitted to trading on a
stock exchange, the fair market value shall be the mean between the
closing bid and asked quotations for the shares on the date in
question in the over-the-counter market, as such prices are reported
in a publication of general circulation selected by the Company and
regularly reporting the market price for the shares in such market.
If there are no bid and asked quotations for the shares on such date,
the fair market value shall be deemed to mean the mean between the
closing bid and asked quotations in the over-the-counter market for
the shares on the closest date preceding the date in question for
which such quotations are available.
(4) An option granted under the Plan to any person:-
(a) shall not, except as provided in Rule 3(4) below, be capable of being
transferred by him, and
(b) shall lapse forthwith if he is adjudged bankrupt.
3. EXERCISE OF OPTIONS
(1) The exercise of any option granted under the Plan shall be effected in such
form and manner as the Board may from time to time prescribe.
(2) Options shall vest at each anniversary of the date of grant of the option
in question ("VEST DATE"). At each Vest Date the options which vest will
be a number calculated by dividing the number of shares over which options
were granted by five.
(3) Subject to sub-rule (4) below and to Rule 5 below or to any contrary
agreement between the Company and any Participant, a Market Option granted
under the Plan may not be
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<PAGE>
exercised before the third anniversary of the Grant Date, whereafter it
may be exercised at any time to the extent vested, and a Premium Option
may be exercised at any time to the extent it has vested.
(4) If any Participant ceases to be a director or employee or consultant of a
Participating Company (whether by reason of his death or otherwise) the
option may to the extent it has vested, and may to the extent it has not
vested (at the sole and absolute discretion of the Board), be exercised
within the period which shall expire 12 months after his so ceasing. In the
case of death, such exercise shall be by the Participant's personal
representatives.
(5) A Participant shall not be treated for the purposes of sub-rule (4) above
as ceasing to be a director or employee of a Participating Company until
such time as he is no longer a director or employee of any of the
Participating Companies, and a female Participant who ceases to be such a
director or employee by reason of pregnancy or confinement and who
exercises her right to return to work under the Employment Protection
(Consolidation) Act 1978 before exercising an option under the Plan shall
be treated for those purposes as not having ceased to be such a director or
employee.
(6) Notwithstanding any other provision of the Plan, an option granted under
the Plan may not be exercised after the expiration of the period of 7 years
beginning with the Grant Date or granted after the tenth anniversary of its
adoption.
(7) (a) Three Year Vested Options shall lapse if not exercised after the
expiry of five years from the Grant Date.
(b) Four Year Vested Options shall lapse if not exercised after the expiry
of six years from the Grant Date.
(c) Five Year Vested Options shall lapse if not exercised after the expiry
of seven years from the Grant Date.
(8) Within 30 days after an option under the Plan has been exercised by any
person, the Board on behalf of the Company shall allot to him (or his
nominee) or, as appropriate, procure the transfer to him (or his nominee)
of the number of shares in respect of which the option has been exercised
provided that:-
(a) the Board considers that the issue or transfer thereof would be lawful
in all relevant jurisdictions; or
(b) in a case where a Participating Company is obliged to account for any
tax (in any jurisdiction) for which the person in question is liable
by virtue of the exercise of
-4-
<PAGE>
the option, and/or for any social security contributions recoverable
from the person in question (together, the "Tax Liability"), that
person has either:
(i) made a payment to the Participating Company of an amount equal to
the Tax Liability; or
(ii) entered into arrangements acceptable to that or another
Participating Company to secure that such a payment is made
(whether by authorising the sale of some or all of the shares on
his behalf and the payment to the Participating Company of the
relevant amount out of the proceeds of sale or otherwise).
(9) All shares allotted under the Plan shall rank pari passu in all respects
with the shares of the same class for the time being in issue save as
regards any rights attaching to such shares by reference to a record date
prior to the date of the allotment.
(10) The option may be exercised through a "cashless exercise" procedure,
involving a broker or dealer nominated by the Company, which affords a
Participant the opportunity to sell immediately some or all of the shares
underlying the exercised portion of the option in order to generate
sufficient cash to pay the exercise price of the option.
4. CASH EQUIVALENT
(1) Where an option granted under the Plan has been exercised by any person in
respect of any number of shares, and those shares have not yet been
allotted or transferred to him in accordance with Rule 3(8) above, the
Board may, at its absolute discretion determine that, in substitution for
his right to acquire such number of those shares as the Board may decide
(but in full and final satisfaction of his said right), he shall be paid a
sum equal to the cash equivalent of that number of shares.
(2) For the purposes of this Rule, the cash equivalent of any shares is the
amount by which the Board's opinion of the Market Value of those shares on
the day last preceding the date on which the option was exercised exceeds
the price at which those shares may be acquired by the exercise of the
option.
(3) Subject to sub-rule (4) below, as soon as reasonably practicable after a
determination has been made under sub-rule (1) above that a person shall be
paid a sum in substitution for his right to acquire any number of shares:-
(a) the Company shall pay to him or procure the payment to him of that sum
in cash, and
-5-
<PAGE>
(b) if he has already paid the Company for those shares, the Company shall
return to him the amount so paid by him.
(4) If the Board in its discretion so decides:-
(a) the whole or part of the sum payable under sub-rule (1) above shall,
instead of being paid to the person in question in cash, be applied on
his behalf in subscribing for shares in the Company at a price equal
to the market value by reference to which the cash equivalent is
calculated, or in purchasing such shares, or partly in one way and
partly in the other, and
(b) the Company shall allot to him (or his nominee) or procure the
transfer to him (or his nominee) of the shares so subscribed for or
purchased.
(5) There shall be made from any payment under this Rule such deductions (on
account of tax or similar liabilities) as may be required by law or as the
Board may reasonably consider to be necessary.
5. TAKEOVER, RECONSTRUCTION, WINDING-UP AND LISTING
(1) If any person obtains control of the Company (within the meaning of section
840 of the Income and Corporation Taxes Act 1988) as a result of making a
general offer to acquire shares in the Company then, subject to sub-rules
(4), (5) and (7) of Rule 3 above, the Board shall within 7 days of
becoming aware thereof notify every Participant thereof and an option
granted under the Plan may be exercised within one month (or such longer
period as the Board may permit) of such notification.
(2) For the purposes of sub-rule (1) above, a person shall be deemed to have
obtained control of the Company if he and others acting in concert with
him have together obtained control of it.
(3) If any person becomes bound or entitled to acquire shares in the Company
under Sections 428 to 430F of the Companies Act 1985, or if under section
425 of that Act the Court sanctions a compromise or arrangement proposed
for the purposes of or in connection with a scheme for the reconstruction
of the Company or its amalgamation with any other company or companies, or
if the Company passes a resolution for voluntary winding-up, or if an order
is made for the compulsory winding up of the Company, the Board shall
forthwith notify every Participant thereof and any option granted under the
Plan may, subject to sub-rules (4), (5) and (7) of Rule 3 above, be
exercised within one month (or such longer period as the Board may permit)
of such notification, but to the extent that it
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<PAGE>
is not exercised within that period shall (notwithstanding any other
provision of the Plan) lapse on the expiration thereof.
(4) If any company (the "acquiring company"):-
(a) obtains control of the Company as a result of making -
(i) a general offer to acquire the whole of the issued ordinary share
capital of the Company which is made on a condition such that if
it is satisfied the person making the offer will have control of
the Company, or
(ii) a general offer to acquire all of the shares in the Company which
are of the same class as the shares which may be acquired by
exercise of the options granted under the Plan, or
(b) obtains control of the Company in pursuance of a compromise or
arrangement sanctioned by the court under section 425 of the Companies
Act 1985 or Article 418 of the Companies (Northern Ireland) Order
1986, or
(c) becomes bound or entitled to acquire shares in the Company under
sections 428 to F of that Act or Articles 421 to 423 of that Order,
Any Participant may at any time by agreement with the acquiring company,
release any option granted under the Plan which has not lapsed ("the old
option") in consideration of the grant to him of an option ("the new
option") which is equivalent to the old option but relates to shares in a
different company (whether the acquiring company itself or some other
company).
(5) The provisions of the Plan shall for this purpose be construed on the basis
that:-
(a) subject to paragraph (c) below, the new option were an option granted
under the Plan at the same time as the old option;
(b) except for purposes of the definitions of "Participating Company" and
"Subsidiary" in Rule 1(1) above, the expression "the Company" were
defined as "a company whose shares may be acquired by the exercise of
options granted under the Plan"; and
(c) notwithstanding that the old option was exercisable in full at the
time of the release of the old option, the new option shall vest as to
25% at the first anniversary of the date of grant of the old option
and thereafter in equal amounts over the next 36 months.
-7-
<PAGE>
6. VARIATION OF CAPITAL
(1) In the event of any increase or variation of the share capital of the
Company (whenever effected), by way of capitalisation, rights issue,
sub-division, consolidation or reduction, the Board shall make such
adjustments as it considers appropriate under sub-rule (2) below,(1)
(2) An adjustment made under this sub-rule shall be to one or more of the
following:
(a) the number of shares in respect of which any option granted under the
Plan may be exercised;
(b) the price at which shares may be acquired by the exercise of any such
option;
(c) where any such option has been exercised but no shares have been
allotted or transferred pursuant to such exercise, the number of
shares which may be so allotted or transferred and the price at which
they may be acquired.
(3) An adjustment under sub-rule (2) above may have the effect of reducing the
price at which shares may be acquired by the exercise of an option to less
than their nominal value, but only if and to the extent that the Board
shall be authorised to capitalise from the reserves of the Company a sum
equal to the amount by which the nominal value of the shares in respect of
which the option is exercised and which are to be allotted pursuant to such
exercise exceeds the price at which the same may be subscribed for and to
apply such sum in paying up such amount on such shares; and so that on
exercise of any option in respect of which such a reduction shall have
been made the Board shall capitalise such sum (if any) and apply the same
in paying up such amount as aforesaid.
(4) As soon as reasonably practicable after making any adjustment under
sub-rule (2) above, the Board shall give notice in writing thereof to
any Participant affected thereby.
7. ALTERATIONS
(1) Subject to sub-rule (2) below, the Board may at any time alter or add to
all or any of the provisions of the Plan, or the terms of any option
granted under it,(2) in any respect.
- ------------------
[(1) Any adjustment to an Incentive Stock Option must comply with section 424
of the Code if the US favourable tax treatment is to be available.]
[(2) No adjustment can be made to the terms of an Incentive Stock Option if it
is to retain its US tax favoured status.]
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<PAGE>
(2) No alteration or addition to the disadvantage of any Participant shall be
made under sub-rule (1) above unless:-
(a) the Board shall have invited every such Participant to give an
indication as to whether or not he approves the alteration or
addition, and
(b) the alteration or addition is approved by a majority of those
Participants who have given such an indication.
(3) As soon as reasonably practicable after making any alteration or addition
under sub-rule (1) above, the Board shall give notice in writing thereof to
any Participant affected thereby.
8. MISCELLANEOUS
(1) The rights and obligations of any individual under the terms of his office
or employment with any Participating Company shall not be affected by his
participation in the Plan or any right which he may have to participate
therein, and an individual who participates therein shall waive any and
all rights to compensation or damages in consequence of the termination of
his office or employment for any reason whatsoever insofar as those rights
arise or may arise from his ceasing to have rights under or be entitled to
exercise any option under the Plan as a result of such termination.
(2) In the event that shares are transferred to a Participant in pursuance of
any option granted under the Plan, the Participant shall, if so required by
the person making the transfer, join that person in making a claim for
relief under section 165 of the Taxation of Chargeable Gains Act 1992 in
respect of the disposal made by him in effecting such transfer.
(3) In the event of any dispute or disagreement as to the interpretation of the
Plan, or as to any question or right arising from or related to the Plan,
the decision of the Board shall be final and binding upon all persons.
(4) Any notice or other communication under or in connection with the Plan may
be given by personal delivery or by sending the same by post, in the case
of a company to its registered office, and in the case of an individual to
his last known address or, where he is a director or employee of a
Participating Company, either to his last known address or to the address
of the place of business at which he performs the whole or substantially
the whole of the duties of his office or employment.
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<PAGE>
(5) In any matter in which they are required to act under the Plan, the
auditors of the Company shall be deemed to be acting as experts and not as
arbitrators and the Arbitration Acts 1950 to 1979 shall not apply hereto.
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<PAGE>
9. INCENTIVE STOCK OPTIONS
(1) The Board may grant an Incentive Stock Option to any person who is eligible
to be granted an option under the Plan upon the terms set out in the Plan
and subject to the additional terms and condition in this Rule.
(2) Subject to sub-rule 9(4) below, the option price for an Incentive Stock
Option granted hereunder may not be less than Market Value on the Grant
Date.
(3) A person who, within the meaning of section 422(b)(6) of the Code, is
deemed to own shares in the Company possessing more than ten per cent of
the total combined voting power of all classes of shares of the Company
(or of its parent or subsidiary corporations within the meaning of section
424 of the Code) shall be eligible to receive an Incentive Stock Option
only if the option price thereunder is at least 110% of the Market Value of
the shares on the Grant Date and only if the term of the option does not
exceed five years.
(4) The aggregate Market Value determined at the Grant Date of shares with
respect to which Incentive Stock Options first become exercisable by any
Participant in any calendar year shall not exceed US$100,000.
(5) Section 421(a) of the Code will not apply to an Incentive Stock Option
unless it is exercised no more than (i) twelve months after the date of
termination of employment because of total and permanent disability or (ii)
three months after the date of termination of employment for any reason
other than that described in clause (i) and death.
(6) Notwithstanding any other provisions of the Plan, the Company will not be
required to issue or cause to be issued any ordinary shares if at such
time such issuance would violate the United States Federal Securities laws
or any other laws of the United States or any state thereof. In addition,
the holder of any ordinary shares issued hereunder agrees not to sell or
transfer such shares in violation of the United States Federal Securities
laws or any other laws of the United States or any state thereof. The
Company shall have the right in its sole discretion to modify the terms of
the Plan at any time and from time to time as it deems necessary or
appropriate to ensure or facilitate such compliance with the foregoing and
to include appropriate legends on any options or ordinary shares issued or
caused to be issued hereunder.
PART B: APPROVED OPTIONS
1. The provisions of Part A shall apply to options granted under this Part B,
except as specified otherwise below.
2. In Rule 1 add the following definitions:-
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"GROUP MEMBER" means:-
(1) a Participating Company or a body corporate which is (within the
meaning of section 736 of the Companies Act 1985) the Company's
holding company or a subsidiary of the Company's holding company; or
(2) a body corporate which is (within the meaning of section 258 of that
Act) a subsidiary undertaking of a body corporate within paragraph
(a) above and has been designated by the Board for this purpose;
"PART A" means Part A of the Plan;
"PART B" means Part B of the Plan;
"SCHEDULE 9" means Schedule 9 to the Taxes Act 1988;
"THE TAXES ACT 1988" means the Income and Corporation Taxes Act 1988;
and expressions not otherwise defined herein have the same meanings as they
have in Schedule 9.
3. In Rule 1 add the following to the definition of "Participating Company"
after the words "one of them being the Company": -
", and to which the Board has with the approval of the Inland Revenue
resolved that the Plan shall for the time being extend".
4. In the definition of "Subsidiary" in Rule 1 add the words:-
"and is under the control of the Company within the meaning of section 840
of the Taxes Act 1988."
5. Add the following wording as a new Rule 2(1):-
"Subject to sub-rule (3) below, a person is eligible to be granted an
option under Part B if (and only if) he is a full-time director or
qualifying employee of a Participating Company.
For the purposes of sub-rule (1) above:-
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<PAGE>
(a) a person shall be treated as a full-time director of a Participating
Company if he is obliged to devote to the performance of the duties
of his office or employment with that and any other Participating
Company not less than 25 hours a week;
(b) a qualifying employee, in relation to a Participating Company, is an
employee of the Participating Company (other than one who is a
director of a Participating Company)."
6. Substitute the following wording for Rule 2(1) as Rule 2(1)A:-
"Subject to Rule 3 below, the Remuneration Committee may grant to any
person who is eligible to be granted an option under Part B an option to
acquire shares in the Company which satisfy the requirements of paragraphs
10 to 14 of Schedule 9, upon the terms set out in Part B and upon such
other objective terms as the Remuneration Committee may specify; and for
this purpose an option to acquire includes an option to purchase and an
option to subscribe."
7. Add the following wording as new Rule 2(5):-
"A person is not eligible to be granted an option under Part B at any time
when he is not eligible to participate in Part B by virtue of paragraph 8
of Schedule 9."
8. Substitute the following wording for Rule 2(3) in so far as it applies to
Market Options:-
"The price at which shares may be acquired by the exercise of an option
granted under Part B shall be determined by the Remuneration Committee
before the grant thereof, but shall not be less than:-
(a) if shares of the same class as those shares are listed in the London
Stock Exchange Daily Official List, the middle-market quotation of
shares of that class (as derived from that List) on the dealing day
last preceding the Grant Date (or such other dealing day as may be
agreed with the Inland Revenue);
(b) if paragraph (a) above does not apply, the market value (within the
meaning of Part VIII of the Taxation of Chargeable Gains Act 1992) of
shares of that class, as agreed in advance for the purposes of the
Plan with the Shares Valuation Division of the Inland Revenue, on
the Grant Date (or such other day as may be agreed with the Inland
Revenue); or
(c) except in the case of an option to acquire shares otherwise than by
subscription, the nominal value of those shares."
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<PAGE>
9. Insert the following wording as a new Rule 2(6):-
"No person shall be granted options under Part B which would, at the time
they are granted, cause the aggregate market value of the shares which he
may acquire in pursuance of options granted to him under Part B or under
any other share option scheme, not being a savings-related share option
scheme, approved under Schedule 9 and established by the Company or by any
associated company of the Company (and not exercised) to exceed or further
exceed L30,000 (or such other limit as may be permitted under Schedule 9)."
10. Rule 3(4) shall apply with the following amendment after the words "after
his so ceasing":
save that where a Participant ceases to be employed by reason of death,
injury, disability, redundancy (within the meaning of the Employment
Protection (Consolidation) Act 1978) or retirement on reaching the age at
which he is bound to retire in accordance with the terms of his contract of
employment, the option may (and must in the case of death) be exercised
within the period which shall expire 12 months after his so ceasing.
11. Insert a new Rule 3(10) as follows:-
"A Participant shall not be eligible to exercise an option under Part B at
any time when he is not eligible to participate in the Plan by virtue of
paragraph 8 of Schedule 9."
12. In Rule 3, reference to "Participating Company" shall be read as a
reference to "Group Member".
13. Rule 4 of Part A shall not apply.
14. Insert a new Rule 5(4) as follows:-
"(4) If any company ("the acquiring company"):-
(a) obtains control of the Company as a result of making-
(i) a general offer to acquire the whole of the issued ordinary share
capital of the Company which is made on a condition such that if
it is satisfied the person making the offer will have control of
the Company, or
(ii) a general offer to acquire all the shares in the Company which
are of the same class as the shares which may be acquired by the
exercise of options granted under the Plan, or
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<PAGE>
(b) obtains control of the Company in pursuance of a compromise or
arrangement sanctioned by the court under section 425 of the Companies
Act 1985 or Article 418 of the Companies (Northern Ireland) Order
1986, or
(c) becomes bound or entitled to acquire shares in the Company under
sections 428 to F of that Act or Articles 421 to 423 of that Order,
any Participant may at any time within the appropriate period (which
expression shall be construed in accordance with paragraph 15(2) of
Schedule 9), by agreement with the acquiring company, release any option
granted under the Plan which has not lapsed ("the old option") in
consideration of the grant to him of an option ("the new option") which
(for the purposes of that paragraph) is equivalent to the old option but
relates to shares in a different company (whether the acquiring company
itself or some other company falling within paragraph 10(b) or (c) of
Schedule 9).
(5) The new option shall not be regarded for the purposes of sub-rule (4)
above as equivalent to the old option unless the conditions set out in
paragraph 15(3) of Schedule 9 are satisfied, but so that the
provisions of the Plan shall for this purpose be construed as if:-
(a) the new option were an option granted under the Plan at the same
time as the old option; and
(b) except for the purposes of the definitions of "Group Member",
"Participating Company" and "Subsidiary" in Rule (l) above and
the reference to "the Board in Rule 3(6) above, the expression
"THE COMPANY" were defined as "a company whose shares may be
acquired by the exercise of options granted under the Plan".
15. Insert a new Rule 6(3) as follows and renumber existing Rule 6(3) and Rule
6(4) as Rule 6(4) and Rule 6(5) respectively:-
"At a time when Part B is approved by the Inland Revenue under Schedule 9,
no adjustment under sub-rule (2) above shall be made without the prior
approval of the Inland Revenue."
16. Insert the following wording at the end of Rule 7(1):-
"(having regard to the fact that, if an alteration or addition which does
not solely relate to a special term is made to any provision of Part B, or
the terms of any option granted under Part B at a time when Part B is
approved by the Inland Revenue under Schedule 9, the
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<PAGE>
approval will not thereafter have effect unless the Inland Revenue have
approved the alteration or addition)."
17. Insert the following wording at the end of existing Rule 7(3) (renumbered
Rule 7(4)):-
"and, if the alteration or addition relates to Part B and is made at a time
when Part B is then approved by the Inland Revenue under Schedule 9, to the
Inland Revenue."
-16-
<PAGE>
EXHIBIT 4.3
<PAGE>
PHOTODISC, INC.
1994 Combined Incentive and Nonqualified
Stock Option Plan
SECTION 1. PURPOSE. The purpose of the 1994 Combined Incentive
and Nonqualified Stock Option Plan (the "Plan") is to enable PhotoDisc, Inc.
(the "Company") to attract and retain the services of people with training,
experience and ability and to provide additional incentive to such persons by
granting them an opportunity to participate in the ownership of the Company.
SECTION 2. STOCK SUBJECT TO PLAN. The stock subject to this Plan
shall be the Company's Common Stock, par value $.01 per share (the "Common
Stock"), presently authorized but unissued or now held or subsequently
acquired by the Company as treasury shares. Subject to adjustment as
provided in Section 10, the aggregate amount of Common Stock reserved for
issuance or delivery upon exercise of all options granted under this Plan
shall not exceed two million four hundred thousand (2,400,000) shares of
Common Stock, as constituted on date of last amendment of this Plan. If any
option granted under this Plan shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares subject thereto
shall thereupon again be available for purposes of this Plan.
SECTION 3. ADMINISTRATION. The plan shall be administered by the
Board of Directors of the Company, in accordance with the following terms and
conditions:
3.1 GENERAL AUTHORITY. Subject to the express provisions of the
Plan, the Board of Directors shall have the authority, in its discretion, to
determine all matters relating to options to be granted under the Plan,
including the selection of individuals to be granted options, the number of
shares to be subject to each option, the exercise price, the term, whether
such options shall be immediately exercisable or shall become exercisable in
increments over time, and all other terms and conditions thereof. Grants
under this Plan to persons eligible need not be identical in any respect,
even when made simultaneously. The Board of Directors may from time to time
adopt rules and regulations relating to the administration of the Plan. The
interpretation and construction by the Board of Directors of any terms or
provisions of this Plan or any option issued hereunder, or of any rule or
regulation promulgated in connection herewith, shall be conclusive and
binding on all interested parties. The Board of Directors in its sole
discretion, may grant incentive stock options ("Incentive Stock Options") as
such term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended, (the "Code") and/or nonqualified stock options ("Nonqualified Stock
Options"). A Nonqualified Stock Option is a stock option which is not an
Incentive Stock Option. The type of option granted, whether an Incentive
Stock Option or a Nonqualified Stock Option shall be clearly identified by
the Board of Directors when granted. The term option when used in this Plan
refers to Incentive Stock Options and Nonqualified Stock Options,
collectively.
<PAGE>
3.2 DIRECTORS. A member of the Board of Directors shall be
eligible to participate in or receive or hold options under this Plan;
PROVIDED, HOWEVER, that no member of the Board of Directors shall vote with
respect to the granting of an option hereunder to himself or herself, as the
case may be.
3.3 DELEGATION TO A COMMITTEE. Notwithstanding the foregoing, the
Board of Directors, if it so determines, may delegate to a committee of the
Board of Directors any or all authority for the administration of the Plan,
and thereafter references to the Board of Directors in this Plan shall be
deemed to be references to the committee to the extent provided in the
resolution establishing the committee.
3.4 PERSONS SUBJECT TO SECTION 16(b). Notwithstanding anything in
the plan to the contrary, the Board of Directors, in its absolute discretion,
may bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the plan to participants who are officers or directors subject
to Section 16(b) of the Securities Exchange Act of 1934, as amended, (the
"1934 Act") without so restricting, limiting or conditioning the Plan with
respect to other participants.
3.5 REPLACEMENT OF OPTIONS. The Board of Directors, in its
absolute discretion, may grant options subject to the condition that options
previously granted at a higher or lower exercise price under the Plan be
canceled or exchanged in connection with such grant. The number of shares
covered by the new options, the exercise price, the term and the other terms
and conditions of the new option, shall be determined in accordance with the
Plan and may be different from the provisions of the canceled or exchanged
options. Alternatively, the Board of Directors may, with the agreement of the
Optionee, amend previously granted options to establish the exercise price at
the then current fair market value of the Company's Common Stock, maintaining
existing vesting and expiration dates.
3.6 LOANS TO OPTIONEES. The Board of Directors, in its absolute
discretion, may provide that the Company loan to Optionees sufficient funds
to exercise any option granted under the Plan and/or to pay withholding tax
due upon exercise of such option. The Board of Directors shall have the
authority to make such determinations at the time of grant or exercise and
shall establish repayment terms thereof, including installments, maturity and
interest rate.
SECTION 4. ELIGIBILITY. Options may be granted only to persons
who, at the time the option is granted, are employees or directors of, or
consultants or independent contractors to, the Company or any of its present
or future parent or subsidiary corporations (as those terms are used in
Section 422(a)(2) and (d)(1) and Section 424(e) and (f) of the Code,
hereafter a "Parent" or "Subsidiary"). Any individual to whom an option is
granted under this Plan shall be referred to hereinafter as "Optionee." Any
Optionee may receive one or more grants for options as the Board of Directors
as shall from time to time determine, and such determinations may be
<PAGE>
-3-
different as to different Optionees and may vary as to different grants.
Optionees who are not employees will only be eligible to receive Nonqualified
Stock Options.
SECTION 5. TERMS AND CONDITIONS OF THE OPTIONS. Options granted
under this Plan shall be evidenced by written agreements which shall contain
such terms, conditions, limitations and restrictions as the Board of
Directors shall deem advisable and which are not inconsistent with this Plan.
Each option granted hereunder shall clearly indicate whether it is an
Incentive Stock Option or Nonqualified Stock Option. Notwithstanding the
foregoing, all such options shall include or incorporate by reference the
following terms and conditions:
5.1 NUMBER OF SHARES: PRICE. The maximum number of shares that
may be purchased pursuant to the exercise of each option and the price per
share at which such option is exercisable (the "exercise price") shall be as
established by the Board of Directors, provided that the exercise price of
Incentive Stock Options shall not be less than the fair market value per
share of the Common stock at the time the option is granted, as determined in
good faith by the Board of Directors. The exercise price of Nonqualified
Stock Options may be greater or less than the fair market value per share of
the Common Stock at the time the option is granted.
5.2 DURATION OF OPTIONS. Subject to the restrictions contained in
Section 9, the term of each option shall be established by the Board of
Directors and, if not so established, shall be ten (10) years from the date
it is granted, but in no event shall the term of any Incentive Stock Option
exceed ten (10) years.
5.3 EXERCISABILITY. Each option shall prescribe the installments,
if any, in which an option granted under the Plan shall become exercisable.
The Board of Directors, in its absolute discretion, may waive or accelerate
any installment requirement contained in outstanding options. In no case may
an option be exercised as to less than 100 shares at any one time (or the
remaining shares covered by the option if less than 100) during the term of
the option. Only whole shares shall be issued pursuant to the exercise of any
option.
5.4 INCENTIVE STOCK OPTION. Any option which is issued as an
Incentive Stock Option under this Plan, shall, notwithstanding any other
provisions of this Plan or the option terms to the contrary, contain all of
the terms, conditions, restrictions, rights and limitations required to be an
Incentive Stock Option, and any provision to the contrary shall be
disregarded.
5.5 RIGHTS AS A STOCKHOLDER. An Optionee shall not have any
privileges as a stockholder with respect to the stock covered by the option
until issuance of such stock, as reflected in the stock register of the
Company.
SECTION 6. NONTRANSFERABILITY OF OPTIONS. Options granted under this
Plan and the rights and privileges conferred hereby may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or the
<PAGE>
-4-
applicable laws of descent and distribution, and shall not be subject to
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of any option under this
Plan or any right or privilege conferred hereby, contrary to the provisions
hereof, or upon the sale or levy or any attachment or similar process, such
option thereupon shall terminate and become null and void. During an
Optionee's lifetime, any options granted under this Plan are personal to him
or her and are exercisable solely by such Optionee.
SECTION 7. CERTAIN LIMITATIONS REGARDING INCENTIVE STOCK OPTIONS.
The grant of Incentive Stock Options shall be subject to the following
special limitations:
7.1 LIMITATION ON AMOUNT OF GRANTS. In no event shall any
Optionee be granted Incentive Stock Options that in the aggregate (together
with all other Incentive Stock Options granted by the Company or any Parents
or Subsidiaries) entitle the Optionee to purchase, in any calendar year
during which such options first become exercisable, stock of the Company, any
Parent or any Subsidiary having a fair market value (determined as of the
time such options are granted) in excess of One Hundred Thousand Dollars
($100,000.00). No limitation shall apply to Nonqualified Stock Options.
7.2 GRANTS TO TEN PERCENT SHAREHOLDERS. Incentive Stock Options
may be granted to a person owning more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company and any Parent
or Subsidiary only if (i) the exercise price is at least one hundred ten
percent (110%) of the fair market value of the stock at the time of grant,
and (ii) the option is not exercisable after the expiration of five (5) years
from the date of grant.
SECTION 8. EXERCISE OF OPTIONS. Options shall be exercised in
accordance with the following terms and conditions:
8.1 PROCEDURE. Options shall be exercised by delivery to the
Company of written notice of the number of shares with respect to which the
option is exercised.
8.2 PAYMENT. Payment of the option price shall be made in full
within five (5) business days of the notice of exercise of the option and
shall be in cash or bank-certified or cashier's checks, or personal check if
permitted by the Board of Directors. To the extent permitted by applicable
laws and regulations (including, but not limited to, federal tax and
securities laws and regulations) and approved by the Board of Directors, an
option may be exercised by delivery of shares of Common Stock of the Company
held by the Optionee having a fair market value equal to the exercise price,
such fair market value to be determined in good faith by the Board of
Directors.
8.3 FEDERAL WITHHOLDING TAX REQUIREMENTS. Upon exercise of an
option, the Optionee shall, upon notification of the amount due, pay to the
Company amounts necessary to satisfy any applicable federal, state and local
withholding tax requirements or shall otherwise
<PAGE>
-5-
make arrangements satisfactory to the Board of Directors for such
requirements. Such arrangements may include payment of the appropriate
withholding tax in shares of stock of the Company having a fair market value
equal to such withholding tax, either through delivery of shares held by the
Optionee or by reduction in the number of shares to be delivered to the
Optionee upon exercise of such option.
SECTION 9. TERMINATION OF EMPLOYMENT OR SERVICE, DISABILITY AND
DEATH.
9.1 GENERAL. If the employment of the Optionee by (or, in the
case of non-employee Optionees who serve on the Board of Directors, service
on the Board of Directors of) the Company, a Parent or a Subsidiary shall
terminate by retirement or for any reason other than death, disability or
cause as hereinafter provided, the option may be exercised by the Optionee at
any time prior to the expiration of three months after the date of such
termination of employment or service (unless by its terms the option sooner
terminates or expires), but only if, and to the extent the Optionee was
entitled to exercise the option at the date of such termination.
9.2 DISABILITY. If the employment of the Optionee by (or, in the
case of non-employee Optionees who serve on the Board of Directors, service
on the Board of Directors of) the Company, a Parent or a Subsidiary is
terminated because of the Optionee's disability (as herein defined), the
option may be exercised by the Optionee at any time prior to the expiration
of one year after the date of such termination (unless by its terms the
option sooner terminates or expires), but only if, and to the extent the
Optionee was entitled to exercise the option at the date of such termination.
For purposes of this section, an Optionee will be considered to be disabled
if the Optionee is unable to engage in any substantial gainful activity by
reason of any medically determinable mental or physical impairment which can
be expected to result in death or which has lasted or can be expected to last
a continuous period of not less than 12 months.
9.3 DEATH. In the event of the death of an Optionee while in the
employ (or, in the case of non-employee Optionees who serve on the Board of
Directors, while serving on the Board of Directors) of the Company, a Parent
or a Subsidiary, the option shall be exercisable on or prior to the
expiration of one year after the date of such death (unless by its terms the
option sooner terminates or expires), but only if, and to the extent the
Optionee was entitled to exercise the option at the date of such death and
only by the Optionee's personal representative if then subject to
administration as part of the Optionee's estate, or by the person or persons
to whom such Optionee's rights under the option shall have passed by the
Optionee's will or by the applicable laws of descent and distribution.
9.4 TERMINATION FOR CAUSE. If the Optionee's employment with (or,
in the case of non-employee Optionees who serve on the Board of Directors,
the Optionee's service on the Board of Directors of) the Company, a Parent or
a Subsidiary is terminated for cause, any option granted hereunder shall
automatically terminate as of the first advice or discussion thereof, and
such Optionee shall thereupon have no right to purchase any shares pursuant
to such option. "Termination for Cause" shall mean a voluntary resignation
without thirty (30) days' prior
<PAGE>
-6-
written notice of resignation or dismissal or removal for (i) conviction of a
felony or a misdemeanor involving moral turpitude, (ii) unlawful conversion
of the Company's assets or the misappropriation of any funds or property of
the Company, (iii) the commission of a crime directed against or directly and
adversely affecting the Company or (iv) frequent and repeated failure to
perform services reasonably requested after and despite warnings by the
Company.
9.5 WAIVER OR EXTENSION OF TIME PERIODS. The Board of Directors
shall have the authority, prior to or within the times specified in this
Section 9 for the exercise of any such option, to extend such time period or
waive in its entirety any such time period to the extent that such time
period expires prior to the expiration of the term of such option. In
addition, the Board of Directors may grant, pursuant to a specified
resolution adopted at the time of grant, modify or eliminate the time periods
specified in this Section 9. However, no Incentive Stock Option may be
exercised after the expiration of ten (10) years from the date of such option
is granted. If an Optionee holding an Incentive Stock Option exercises such
option, by permission, after the option will no longer be treated as an
Incentive Stock Option under the Code and shall automatically be converted
into a Nonqualified Stock Option.
9.6 TERMINATION OF OPTIONS. To the extent that the option of any
deceased Optionee or of any Optionee whose employment (or, in the case of
non-employee Optionees who serve on the Board of Directors, whose service on
the Board of Directors) is terminated shall not have been exercised within
the limited period prescribed in this Section 9, all further rights to
purchase shares pursuant to such option shall cease and terminate at the
expiration of such period. No Incentive Stock Option may be exercised after
the expiration of ten (10) years from the date such option is granted,
notwithstanding any provision to the contrary.
9.7 NON-EMPLOYEE/NON-DIRECTOR OPTIONEES. Options granted to
Optionees who are not employees or members of the Board of Directors of the
Company, a Parent or a Subsidiary at the time of grant shall not be subject
to the provisions of this Section 9, except as specifically provided in the
option.
SECTION 10. OPTION ADJUSTMENTS.
10.1 ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The aggregate
number and class of shares on which options may be granted under this Plan,
the number and class of shares covered by each outstanding option and the
exercise price per share thereof (but not the total price), and all such
options, shall each be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock of the Company resulting from
a split-up or consolidation of shares or any like capital adjustment, or the
payment of any stock dividend.
10.2 EFFECT OF CERTAIN TRANSACTIONS. Except as provided in
subsection 10.3, upon a merger, consolidation, acquisition of property or stock,
reorganization or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other
<PAGE>
-7-
property in exchange for their shares of Common Stock, any option granted
hereunder shall terminate, provided that the Optionee shall have the right
immediately prior to any such merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation to exercise his or her
option in whole or in part to the extent such options are vested.
10.3 CONVERSION OF OPTIONS ON STOCK FOR STOCK EXCHANGE. If the
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger, consolidation, acquisition of property or
stock or reorganization, all options granted hereunder shall terminate in
accordance with the provision of subsection 10.2 unless the Board of
Directors and the corporation issuing the Exchange Stock, in their sole
discretion and subject to any required action by the shareholders of the
Company and such corporation, agree that all outstanding options granted
hereunder are converted into options to purchase shares of Exchange Stock.
The amount and price of such options shall be determined by adjusting the
amount and price of the options granted hereunder in the same proportion as
used for determining the number of shares of Exchange Stock the holders of
the Common Stock receive in such merger, consolidation, acquisition of
property or stock, separation or reorganization. The vesting schedule set
forth in the option agreement shall continue to apply to the options granted
for the Exchange Stock.
10.4 FRACTIONAL SHARES. In the event of any adjustment in the
number of shares covered by any option, any fractional shares resulting from
such adjustment shall be disregarded and each such option shall cover only
the number of full shares resulting from such adjustment.
10.5 DETERMINATION OF BOARD OF DIRECTORS TO BE FINAL. All such
adjustments shall be made by the Board of Directors and its determination as
to what adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive.
SECTION 11. SECURITIES REGULATIONS.
11.1 COMPLIANCE. Shares shall not be issued with respect to an
option granted under this Plan unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended, the 1934 Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall further be
subject to the approval of counsel for the Company with respect to such
compliance. Inability of the Company to obtain from any regulatory body
having jurisdiction, the authority deemed by the Company's counsel to be
necessary for the lawful issuance and sale of any shares hereunder, shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
<PAGE>
-8-
11.2 REPRESENTATIONS BY OPTIONEE. As a condition to the exercise
of an option, the Company may require the Optionee to represent and warrant
at the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such
shares, if, in the opinion of counsel for the Company, such representation is
required by any relevant provision of the laws referred to in Section 11.1.
At the option of the Company, a stop transfer order against any records of
the Company, and a legend indicating that the stock may not be pledged, sold
or otherwise transferred unless an option of counsel was provided (concurred
in by counsel for the Company) stating that such transfer is not in violation
of nay applicable law or regulation, may be stamped on the stock certificate
(to the extent the shares of the Company are certificated) in order to assure
exemption from registration. The Board of Directors may also require such
other action or agreement by the Optionees as may from time to time be
necessary to comply with the federal and state securities laws. This
provision shall not obligate the Company to undertake registration of options
or stock hereunder.
SECTION 12. EMPLOYMENT RIGHTS. Nothing in this Plan or any option
or right granted pursuant hereto shall confer upon any Optionee any right to
be continued in the employment of the Company, a Parent or any Subsidiary or
to remain a director, or to interfere in any way with the right of the
Company, a Parent or any Subsidiary, in its sole discretion, to terminate
such Optionee's employment at any time or to remove the Optionee as a
director at any time.
SECTION 13. AMENDMENT AND TERMINATION.
13.1 ACTION BY SHAREHOLDERS. The Plan may be terminated, modified or
amended by the shareholders of the Company.
13.2 ACTION BY BOARD OF DIRECTORS. The Board of Directors may
also terminate the Plan, or modify or amend the Plan in such respects as it
shall deem advisable in order to conform to any changes in law or regulation
applicable thereto, or in other respects; PROVIDED, HOWEVER, that the Board
of Directors may not, without further approval by the shareholders of the
Company:
(i) Change the number of shares in the aggregate which may be issued
pursuant to options granted under the Plan;
(ii) Except as provided in Section 9.5, increase the period during
which options may be granted or exercised; or
(iii) Change the terms of the Plan such that the Plan loses its
qualification as an incentive stock option plan under Section 422 of the
Code.
<PAGE>
-9-
No termination, suspension or amendment of the Plan may, without
the consent of each Optionee to whom any option shall theretofore have been
granted, adversely affect the rights of such Optionees under such options.
13.3 AUTOMATIC TERMINATION. Unless the Plan shall theretofore
have been terminated as herein provided, this Plan shall terminate ten (10)
years from the earlier of: (i) the date on which the Plan is adopted; or (ii)
the date on which this Plan is approved by the shareholders of the Company.
No option may be granted after such termination, or during any suspension of
this Plan. The amendment or termination of this Plan shall not, without the
consent of the Optionee, alter or impair any rights or obligations under any
option theretofore granted under this Plan.
SECTION 14. EFFECTIVE DATE OF THE PLAN. This Plan shall become
effective on the date of its adoption by the Board of Directors of the
Company and options may be granted immediately thereafter but no option may
be exercised under the Plan unless and until the Plan shall have been
approved by the shareholders within 12 months after the date of adoption of
the Plan by the Board of Directors. If such approval is not obtained within
such period, the Plan and any options granted thereunder shall be null and
void.
Approved by the Board of Directors on July 14, 1994.
Approved by the Shareholders on July 14, 1994.
Amended by the Board of Directors on September 11, 1994.
Amended by the Shareholders on May 12, 1995.
Amended by the Board of Directors and the Shareholders on June 17,
1996.
Amended by the Board of Directors on August 2, 1996.
<PAGE>
EXHIBIT 5.1
February 13, 1998
Getty Images, Inc.
122 South Michigan Avenue
Suite 900
Chicago, Illinois 60606
GETTY IMAGES, INC.
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel for Getty Images, Inc., a Delaware
corporation (the "Company"), in connection with the above-referenced
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on February 13, 1998 (as such may thereafter be amended or
supplemented, the "Registration Statement") with respect to the registration
under the Securities Act of 1933, as amended, of shares of Common Stock, par
value $0.01 per share (the "Shares"), of the Company that are to be issued in
connection with the Getty Images, Inc. 1998 Stock Incentive Plan, the Getty
Communications plc Executive Share Option Plan and the PhotoDisc, Inc. 1994
Combined Incentive and Non-Qualified Stock Option Plan, as described in the
Registration Statement.
As such counsel and in connection with the opinions expressed below,
we have examined such corporate records of the Company, certificates of
public officials, officers of the Company and other persons, and such other
documents, agreements and instruments as we have deemed necessary as a basis
for the opinions hereinafter expressed. In our examinations, we have assumed
the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the originals of all
documents submitted to us as
<PAGE>
2
copies. In expressing the opinions set forth below, we have also relied on
certain certificates of officers of the Company and certificates of public
officials.
Our opinions expressed below are limited to the General Corporation
Law of the State of Delaware and the federal law of the United States, and we
do not express any opinion herein concerning any other law.
Based upon and subject to the foregoing, having regard for such
other considerations as we deem relevant, we are of the opinion that the
Shares, when issued in the manner described in the Registration Statement,
will be legally issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ SHEARMAN & STERLING
CDD/MJC/JBB/AHW
<PAGE>
EXHIBIT 23.2
CONSENT OF THE INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of Getty Images, Inc. on Form S-8 of Amendment No. 5 to the
Registration Statement on Form S-4 (File No. 333-38777) which includes our
report dated March 13, 1997, of our audits of the consolidated financial
statements and financial statement schedules of Getty Communications plc as
of December 31, 1996 and 1995, and for the period March 14, 1995 through
December 31, 1995 and for the year ended December 31, 1996, and the consolidated
financial statements and financial statement schedules of Tony Stone Associates
Limited as of December 31, 1994 and March 13, 1995, and for the year ended
December 31, 1994 and for the period January 1, 1995 through March 13, 1995.
We also consent to the reference to our firm under the caption "Experts".
Coopers & Lybrand
Chartered Accountants
London
February 9, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of Getty Images, Inc. on Form S-8 of our report dated
August 12, 1997 (September 16, 1997, as to Note 1) appearing in Amendment
No. 5 to the Registration Statement No. 333-38777 of Getty Images, Inc.
on Form S-4 filed on January 7, 1998.
Deloitte & Touche LLP
Seattle, Washington
February 11, 1998
