<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
GETTY IMAGES, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Shares of Common Stock, par value $0.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
374276 10 3
- --------------------------------------------------------------------------------
(CUSIP Number)
Jan D. Moehl
Getty Investments L.L.C.
1325 Airmotive Way, Suite 262
Reno, Nevada 89502-3420
(702) 348-0111
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications)
Copy to:
Christopher D. Dillon, Esq.
Shearman & Sterling
555 California Street, Suite 2000
San Francisco, CA 94104
Telephone: (415) 616-1100
- --------------------------------------------------------------------------------
February 9, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Exhibit Index is at Page 18
<PAGE>
CUSIP No. 374276 10 3
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Getty Investments L.L.C.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(2) Check the Appropriate Box if a Member of a Group (See Instructions)
/ / (a)
----------------------------------------------------------------------
/X/ (b)
----------------------------------------------------------------------
(3) SEC Use Only
--------------------------------------------------------------
(4) Source of Funds (See Instructions) OO
----------------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Item 2(d) or 2(e). / /
(6) Citizenship or Place of Organization
Delaware
---------------------------------------------------------------------------
- --------------
Number of (7) Sole Voting Power 8,040,690
--------------------------------
Shares
--------------------------------------------------
Beneficially (8) Shared Voting Power 1,245,204
------------------------------
Owned by
--------------------------------------------------
Each (9) Sole Dispositive Power 8,040,690
---------------------------
Reporting
--------------------------------------------------
Person (10) Shared Dispositive Power 0
-------------------------
With
--------------------------------------------------
- --------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person 8,040,690
--------------
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) X
-----------------------------------------------------------
(13) Percent of Class Represented by Amount in Row (11) 26.9%
------------------------
(14) Type of Reporting Person (See Instructions) OO
-------------------------------
2
<PAGE>
Item 1. SECURITY AND ISSUER.
The class of equity securities to which this Statement on Schedule 13D
(this"Statement") relates is the shares of common stock, par value $0.01 per
share (the "Shares"), of Getty Images, Inc. ("Issuer"), a Delaware corporation.
The principal executive offices of the Issuer are located at 122 South Michigan
Avenue, Suite 900, Chicago, Illinois 60606.
Item 2. IDENTITY AND BACKGROUND.
This Statement is being filed by Getty Investments L.L.C., a Delaware
limited liability company ("Getty Investments").
The principal offices of Getty Investments are located at 1325
Airmotive Way, Suite 262, Reno, Nevada 89502-3240. Getty Investments was formed
with the objective of investing in Getty Communications plc ("Getty
Communications"), a public limited company organized under the laws of England
and Wales and the predecessor of Issuer. Upon the consummation of the
Transactions (as defined and described in Item 3 below), Getty Investments
became an investor in Issuer.
The members of Getty Investments are four Getty family trusts (the
"Getty Trusts") and 525 Investments Limited. The Getty Trusts are the Cheyne
Walk Trust, the Ronald Family Trust A, the Ronald Family Trust B and the
Gordon P. Getty Family Trust. The Getty Trusts own, collectively, 89.31% of
the membership interests of Getty Investments, with the Cheyne Walk Trust,
the Ronald Family Trust A, the Ronald Family Trust B and the Gordon P. Getty
Family Trust owning 39.31%, 18.75%, 18.75% and 12.5%, respectively. The
remaining 10.69% interest in Getty Investments is held by 525 Investments
Limited. 525 Investments Limited is a company owned by the family trusts of
Sir J. P. Getty, one of the children of J. P. Getty (Senior).
Getty Investments is governed by the Restated Limited Liability
Company Agreement, dated February 9, 1998 (the "Getty Investments Company
Agreement"), among the Getty Trusts and 525 Investments Limited. The Getty
Investments Company Agreement provides that the board of directors of Getty
Investments will consist of six directors. One director will be appointed by
each of the four Getty Trusts. In addition, the members of Getty Investments
agree to appoint one person nominated by each of the October 1993 Trust
3
<PAGE>
and Crediton Limited. The October 1993 Trust is a trust established by Mark
H. Getty, the son of Sir J. P. Getty and Co-Chairman of Issuer and Chairman
of Getty Investments, of which he and his immediate family are beneficiaries.
Crediton Limited is a company of which the sole beneficiary is Jonathan D.
Klein, Chief Executive Officer of Issuer.
Under the Getty Investments Company Agreement, the members of Getty
Investments also agree to appoint the director nominated by the October 1993
Trust as the Chairman of Getty Investments. Mark H. Getty has been appointed a
director and Chairman of Getty Investments on behalf of the October 1993
Trust, and Jonathan D. Klein has been appointed a director of Getty
Investments on behalf of Crediton Limited.
Decisions at meetings of the board of directors of Getty Investments
require a simple majority of the total number of directors, I.E., four
directors. There are currently no voting arrangements whereby one member of
Getty Investments can control a majority of the directors of the board of Getty
Investments.
The directors and executive officers of Getty Investments are set
forth on Schedule I attached hereto. Schedule I sets forth the following
information with respect to each such person:
(i) name;
(ii) business address;
(iii) present principal occupation or employment and the name,
principal business and address of any corporation or other organization in
which such employment is conducted; and
(iv) citizenship.
During the last five years, neither Getty Investments nor any person
named in Schedule I attached hereto has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
4
<PAGE>
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On February 9, 1998, Getty Investments acquired 8,040,690 Shares in
connection with the Transactions (as defined below) pursuant to (i) the Merger
Agreement, dated as of September 15, 1997 (the "Merger Agreement"), by and among
Issuer, Getty Communications, PhotoDisc, Inc., a Washington corporation
("PhotoDisc"), and Print Merger, Inc., a Washington corporation and wholly owned
subsidiary of Issuer ("Merger Sub"), and (ii) the Subscription Agreement, dated
as of February 9, 1998 (the "Getty Investments Subscription Agreement"), between
Getty Investments and Issuer.
6,522,046 of the Shares acquired by Getty Investments were received
in exchange for Getty Investments' holdings of Class A ordinary shares,
nominal value one pence per share ("Getty Communications Class A Ordinary
Shares"), of Getty Communications and Getty Investments' holdings of Class B
ordinary shares, nominal value one pence per share ("Getty Communications
Class B Ordinary Shares" and, together with Getty Communications Class A
Ordinary Shares, "Getty Communications Ordinary Shares"), of Getty
Communications. Pursuant to the Merger Agreement, upon the terms and subject
to the conditions thereof, (i) pursuant to a scheme of arrangement (the
"Scheme of Arrangement") in accordance with the Companies Act of 1985 of
Great Britain (the "Companies Act"), each issued Getty Communications Class B
Ordinary Share was converted into one Getty Communications Class A Ordinary
Share, each Getty Communications Ordinary Share was transferred to Issuer or
its nominees and the holders of Getty Communications Ordinary Shares were
issued one Share for every two Getty Communications Ordinary Shares held of
record by such holders, and Getty Communications became a wholly owned
subsidiary of Issuer; and (ii) PhotoDisc was merged with and into Merger Sub
(the "Merger", and, together with the Scheme of Arrangement, the
"Transactions"), with Merger Sub as the surviving corporation in the Merger
becoming a wholly owned subsidiary of Issuer and the then outstanding shares
of common stock, par value $0.01 per share of PhotoDisc ("PhotoDisc Shares")
were converted into the right to receive the amount of cash and the number of
Shares specified in the Merger Agreement.
Also in connection with the Transactions, Getty Investments acquired
1,518,644 Shares for $18.4375 per share, or $28,000,000 in the aggregate,
pursuant to the Getty Investments Subscription Agreement. The funds for the
purchase of Shares pursuant to the Getty Investments Subscription Agreement were
supplied to Getty Investments as capital contributions by the members of Getty
Investments.
Item 4. PURPOSE OF TRANSACTION.
Getty Investments has acquired the Shares to which this Schedule 13D
relates for the purpose of making an investment in Issuer.
Getty Investments from time to time intends to review its investment
in Issuer on the basis of various factors, including Issuer's business,
financial condition, results of
5
<PAGE>
operations and prospects, general economic and industry conditions, the
securities markets in general and those for Issuer's securities in particular,
as well as other developments and other investment opportunities. Based upon
such review, Getty Investments will take such actions in the future as Getty
Investments may deem appropriate in light of the circumstances existing from
time to time. If Getty Investments believes that further investment in Issuer
is attractive, whether because of the market price of Issuer's securities or
otherwise, it may acquire Shares either in the open market or in privately
negotiated transactions. Similarly, depending on market and other factors,
Getty Investments may determine to dispose of some or all of the Shares
currently owned by Getty Investments or otherwise acquired by Getty Investments
either in the open market or in privately negotiated transactions.
Except as set forth above, Getty Investments has not formulated any
plans or proposals which relate to or would result in: (i) the acquisition by
any person of additional securities of Issuer or the disposition of securities
of Issuer; (ii) an extraordinary corporate transaction involving Issuer or any
of its subsidiaries; (iii) a sale or transfer of a material amount of the
assets of Issuer or any of its subsidiaries; (iv) any change in the present
board of directors or management of Issuer; (v) any material change in Issuer's
capitalization or dividend policy; (vi) any other material change in Issuer's
business or corporate structure; (vii) any change in Issuer's charter or bylaws
or other instruments corresponding thereto or other action which may impede
the acquisition of control of Issuer by any person; (viii) causing a class of
Issuer's securities becoming deregistered or delisted; (ix) a class of equity
securities of Issuer becoming eligible for termination of registration or (x)
any action similar to any of those enumerated above.
Item 5. INTEREST IN SECURITIES OF ISSUER.
Based on the most recent information available to Getty Investments,
Getty Investments is deemed to beneficially own the number of Shares and the
percentage of outstanding Shares listed in the responses to Items 11 and 13,
respectively, on the cover page filed herewith, and such responses are
incorporated by reference herein. In addition, the number of Shares with
respect to which Getty Investments (i) has sole voting power, (ii) shares voting
power, (iii) has sole dispositive power, and (iv) shares dispositive power, are
listed in the responses to Items 7, 8, 9, and 10, respectively, on the cover
page filed herewith, and such responses are incorporated by reference herein.
The following individuals listed on Schedule I attached hereto, are
beneficial owners of Shares, with respect to all of which Getty Investments
disclaims beneficial ownership:
Mark H. Getty is the beneficial owner of 923,985 Shares, by virtue
of his right to acquire, as of February 9, 1998, such Shares pursuant to the
exercise of options outstanding under the Getty Communications plc Executive
Share Option Plan. He has sole power to vote (or direct the vote of) and
sole power to dispose of (or direct the disposition of) all such
6
<PAGE>
Issuer Shares. Mark H. Getty may also be deemed to be the beneficial owner of
622,602 Shares held by the October 1993 Trust.
Jonathan D. Klein is the beneficial owner of 923,985 Shares, by
virtue of his right to acquire, as of February 9, 1998, such Shares pursuant
to the exercise of options outstanding under the Getty Communications plc
Executive Share Option Plan. He has sole power to vote (or direct the vote
of) and sole power to dispose (or direct the disposition of) all such Shares.
Jonathan D. Klein may also be deemed to be the beneficial owner of 622,602
Shares held by Crediton Limited.
Andrew S. Garb is the beneficial owner of 10,000 Shares. He has
sole power to vote (or direct the vote of) and sole power to dispose of (or
direct the disposition of) all such Shares.
William A. Newsom is the beneficial owner of 3,500 Shares. He
has sole power to vote (or direct the vote of) and sole power to dispose of
(or direct the disposition of) all such Shares.
Thomas E. Woodhouse is the beneficial owner of 2,000 Shares. He
has sole power to vote (or direct the vote of) and sole power to dispose
of (or direct the disposition of) all such Shares.
Jan D. Moehl is the beneficial owner of 21,000 Shares. He has sole
power to vote (or direct the vote of) and sole power to dispose (or direct
the disposition of) 10,000 of such Shares. He shares, with Kathleen W.
Moehl, power to vote (or direct the vote of) and power to dispose of (or
direct the disposition of) 11,000 of such Shares. As described below in Item
6, Jan D. Moehl has pledged 10,000 Shares to the Trustees of the Cheyne Walk
Trust as security for a five-year fully amortizing loan made to acquire such
Shares.
Except as described herein, neither Getty Investments nor any party
referred to above, has acquired or disposed of, or entered into any other
transaction with respect to, any Shares during the past 60 days.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF ISSUER.
Getty Investments is a party to the following agreements,
arrangements, understandings or relationships with respect to securities of
Issuer, which are summarized in the following sections. (The summaries below do
not purport to be complete and are
7
<PAGE>
subject, and qualified in their entirety by reference, to all the terms and
provisions contained within the actual agreements.)
A. GETTY INVESTMENTS SUBSCRIPTION AGREEMENT
In the Getty Investments Subscription Agreement, Getty Investments
agreed to subscribe for, and Issuer agreed to issue to Getty Investments,
1,518,644 Shares at a subscription price of $18.4375 per share for an aggregate
consideration of $28,000,000. The foregoing description of the Getty
Investments Subscription Agreement is qualified in its entirety by reference to
such agreement, a copy of which is attached hereto as Exhibit 1.
B. STOCKHOLDERS' AGREEMENT
The Stockholders' Agreement dated as of February 9, 1998 (the
"Stockholders' Agreement") by and among (i) Issuer, (ii) Getty Investments,
Mark H. Getty, Jonathan D. Klein, Crediton Limited and the October 1993 Trust
(collectively, the "Getty Group"), and (iii) PDI, Mark Torrance and Wade
Torrance (collectively, the "Torrance Group"), and together with the Getty
Group, the "Significant Stockholders"), places certain restrictions on the
Significant Stockholders' abilities to transfer Shares. Pursuant to the
terms of the Stockholders' Agreement, no Significant Stockholder may sell,
encumber or otherwise transfer such Significant Stockholders' Shares except
(i) to Permitted Transferees (as defined below); (ii) pursuant to the terms
of the Stockholders' Agreement; (iii) pursuant to a registered public
offering of Shares in which no person or "Group" will purchase more than five
percent of the then outstanding Shares; or (iv) sales within the Rule 144
volume limitations (or within two times the Rule 144(e) volume limitations
for sellers entitled to rely upon Rule 144(k)), or in a cashless exercise of
options. A "Permitted Transferee" is defined as (i) Issuer or its
subsidiaries; (ii) in the case of any Significant Stockholder who is a
natural person, a person to whom Shares are transferred from such Significant
Stockholder by gift, will or the laws of descent and distribution; (iii) any
other member of the Getty Group or the Torrance Group, as the case may be
(and any Permitted Transferee of such Group); or (iv) any affiliate of any
Significant Stockholder; or (v) with respect only to the taking of an
encumbrance on Shares, any commercial bank or other financial institution
that lends funds to a Significant Stockholder on the condition of taking such
encumbrance in such Significant Stockholder's Shares.
If any Significant Stockholder (a "Prospective Seller") receives from
a person, other than a Permitted Transferee or another Significant Stockholder
(a "Stockholders' Agreement Third Party"), a bona fide offer to purchase any or
all of such Prospective Seller's Shares (the "Offered Stock") and such
Prospective Seller desires to sell the Offered Stock to such Stockholders'
Agreement Third Party, the Prospective Seller must provide written notice (the
"Offer Notice") of such offer to Issuer and the other Significant Stockholders
constituting the Significant Stockholders' "Group" in which the Prospective
Seller does not belong. The Offer Notice will constitute an offer by such
Prospective Seller to sell to the recipients of such Offer Notice all of the
Offered Stock at the price per share of Shares at which the sale to the
Stockholders' Agreement Third Party is proposed to be made in cash and will be
irrevocable for ten days after receipt of such Offer Notice. The Prospective
Seller has the right to reject any or all of the acceptances of the offer to
sell the Offered Stock and sell all, but not less than all, the Offered Stock to
the Stockholders' Agreement Third Party if (i) the Prospective Seller has not
received acceptances as to all the
8
<PAGE>
Offered Stock prior to the expiration of the ten-day period following receipt of
the Offer Notice or (ii) an accepting party fails to consummate the purchase of
the Offered Stock and neither Issuer nor the other Significant Stockholders who
received the Offer Notice are prepared to purchase such Offered Stock within
five business days of receiving notice of such failed purchase. The obligations
and rights of the Significant Stockholders relating to the rights of first
refusal will terminate when the Getty Group or the Torrance Group, as the case
may be, and any of such "Group's" Permitted Transferees collectively
beneficially own fewer than the greater of 3,000,000 Shares and such number of
Shares as is equal to two percent or less of the then outstanding Shares.
Each of the Torrance Group and the Getty Group will have the right,
subject to termination conditions, to nominate one director. For so long as the
Getty Group has the right to nominate one director, it shall also have the right
to appoint from among the directors of Issuer, the Chairman of Issuer, provided,
however, that for so long as either Mark Torrance or Mark H. Getty are
Co-Chairmen of the Board of Directors of Issuer (the "Issuer Board"), such right
shall not be in effect.
Issuer shall include as a nominee for the Issuer Board the person
designated by each of the Getty Group and the Torrance Group and shall nominate
such person and use its reasonable best efforts to cause the election of such
person, unless the Issuer Board, in the exercise of its fiduciary duties,
reasonably shall determine that such person is not qualified to serve on the
Issuer Board. If the Issuer Board reasonably determines that such designee is
not so qualified, the Group designating such nominee shall have the opportunity
to specify one additional designee who shall be so included as a nominee subject
to the qualification set forth in the immediately preceding sentence.
The Significant Stockholders have agreed to take such actions within
their control as are necessary to implement each "Group's" right to appoint a
director, including the voting of their respective shares in favor of the
nominees designated by the Getty Group and the Torrance Group in accordance with
the Stockholders' Agreement.
The foregoing description of the Stockholders' Agreement is qualified
in its entirety by reference to such agreement, a copy of which is attached
hereto as Exhibit 2.
C. GETTY PARTIES SHAREHOLDERS' AGREEMENT
Prior to the completion of the Transactions, Getty Investments, the
October 1993 Trust and Crediton Limited, as the holders of the Getty
Communications Class B Ordinary Shares, were parties to a shareholders'
agreement with respect to their ownership of such shares. Upon consummation of
the Transactions, Getty Investments, Issuer, Crediton Limited, Abacus (C.I.)
Ltd. as the Trustee of the October 1993 Trust, Mark H. Getty and Jonathan D.
Klein entered into the Restated Shareholders' Agreement, dated February 9, 1998
(such agreement, as amended, being the "Getty Parties Shareholders'
9
<PAGE>
Agreement"). Certain provisions of the Getty Parties Shareholders' Agreement
are described below.
The Getty Parties Shareholders' Agreement provides that all Shares
held by the parties thereto (other than those held by Mark H. Getty and
Jonathan D. Klein) will be voted as directed by the board of directors
of Getty Investments. Before transferring such shares (other than certain
permitted transfers to affiliates or family members who, as a condition of such
permitted transfer, must agree to be bound by the terms of the Getty Parties
Shareholders' Agreement), the parties must first offer such shares to the other
parties. The price at which such shares must be offered is either the price that
another purchaser is willing to pay for such shares or, in the event of a
transfer pursuant to an exercise of registration rights, the average closing
market price of the Shares over the preceding ten business days. In the event
that these rights of first refusal are not exercised up, then the rights of
first refusal in the Stockholders' Agreement apply.
In the Getty Parties Shareholders' Agreement, the October 1993
Trust and Crediton Limited each agreed to retain at least 311,301 Shares
until July 8, 2001 and thereafter each agreed to retain at least 155,651
Shares for an additional two years; PROVIDED, HOWEVER, that the October 1993
Trust and Crediton Limited may sell shares in the event that (i) Mark H.
Getty (in the case of the October 1993 Trust) or Jonathan D. Klein (in the
case of Crediton Limited) ceases to be employed by Issuer or any of its
subsidiaries, or (ii) Getty Investments ceases at any time to hold seven
percent or more of the then outstanding Shares. In addition, if Getty
Investments or any of its members sells any Shares, the October 1993 Trust
and Crediton Limited will be permitted to sell the same proportion of their
Shares which are subject to this sale restriction as the number of Shares
sold by Getty Investment bears to its total number of Shares. The Getty
Parties Shareholders' Agreement provides that each of the October 1993 Trust
and Crediton Limited will, in consideration of its participation under such
agreement, receive an annual fee from Getty Investments in 1998 of L78,843
and L272,137, subject to certain inflation adjustments, respectively, and
thereafter an annual fee of L28,485 and L98,681, subject to certain inflation
adjustments, respectively, for each of the next four years.
In addition, each of Jonathan D. Klein, Crediton Limited, Mark H.
Getty and the October 1993 Trust (together the "Covenantees") agreed not to
transfer (other than to a permitted transferee in accordance with the Getty
Parties Shareholders' Agreement) any of their Shares until the later of the
announcement by the Issuer of its results for the second quarter of 1998 and
August 9, 1998, except for the transfer by Jonathan D. Klein or Crediton
Limited of up to 60,000 Shares in the aggregate or the transfer by Mark H.
Getty or the October 1993 Trust of up to 60,000 Shares in the aggregate.
Each of the Covenantees agreed with Getty Investments that in the event of
any proposed transfer (other than to a permitted transferee in accordance
with the Getty Parties Shareholders' Agreement) it shall give Getty
Investments at least ten days' notice of such proposed transfer and shall
consult with Getty Investments about the reasons for, manner of and timing of
such proposed transfer.
10
<PAGE>
The Getty Parties Shareholders' Agreement also provides that each of
the October 1993 Trust and Crediton Limited have the right to nominate a
director to the board of directors of Getty Investments. Such parties have
nominated Mark H. Getty and Jonathan D. Klein. The October 1993 Trust also has
the right to nominate the chairman of Getty Investments. The October 1993 Trust
has nominated Mark H. Getty as Chairman of Getty Investments.
Getty Investments agreed in the Getty Parties Shareholders' Agreement
that, subject to certain exceptions, it will not operate or own or control any
other business in the visual content industry.
The Getty Parties Shareholders' Agreement expires on July 8, 2003, but
may be terminated earlier with respect to a party (or its permitted transferees)
who ceases to be a shareholder of Issuer. The Getty Parties Shareholders'
Agreement terminates for all parties if the parties to the agreement cease to
own beneficially fewer than the greater of 3,000,000 Shares and such number of
shares as is equal to two percent or less of the then outstanding Shares.
The foregoing description of the Getty Parties Shareholders' Agreement
is qualified in its entirety by reference to such agreement, a copy of which is
attached hereto as Exhibit 3.
D. REGISTRATION RIGHTS AGREEMENT
Pursuant to the terms of the Registration Rights Agreement dated
February 9, 1998 between Issuer and Getty Investments (the "Getty Investments
Registration Rights Agreement"), Getty Investments may require Issuer to file a
registration statement with respect to all or a portion of Getty Investments'
Shares (a "Getty Demand Right"). Getty Investments will have five Getty Demand
Rights, which may be exercised only if the aggregate number of Shares covered by
the Getty Demand Right is greater than 850,000 shares. In addition to the Getty
Demand Rights, Getty Investments will have the right to have any or all of their
Shares included in any registration by Issuer (a "Getty Piggy-Back Right"),
subject to certain limitations that may be imposed by the managing underwriter.
Both the Getty Demand Rights and the Getty Piggy-Back Rights will terminate on
the earlier of (i) immediately, once all of the Shares held by Getty Investments
can be sold within a three-month period under the volume limitation of Rule 144
of the Securities Act and (ii) on the 15th anniversary of the date of the Getty
Investments Registration Rights Agreement.
The foregoing description of the Getty Investments Registration Rights
Agreement is qualified in its entirety by reference to such agreement, a copy of
which is attached hereto as Exhibit 5.
11
<PAGE>
E. TRADEMARK OPTION AGREEMENT
Upon the consummation of the Transactions, Issuer has trademark
registrations and applications in respect of the names Getty Communications and
Hulton Getty, and derivatives thereof (including the name "Getty Images") and
the related logo (together, the "Getty Trademarks"). The Restated Option
Agreement, dated February 9, 1998 (the "Trademark Option Agreement"), by and
between Getty Investments, Issuer and Getty Communications grants Getty
Investments an option, in the event that Issuer becomes controlled by a third
party or parties not affiliated with the Getty family, to call for an assignment
to it, for a nominal sum, of all rights to the Getty Trademarks. Upon such
assignment, Getty Communications will have 12 months in which it will be
permitted to continue to use the Getty Trademarks and thereafter will have to
cease such use. Although the primary brands used by Getty Communications are
"Tony Stone Images", "Hulton Getty", "Gamma Liaison" and "Energy Film Library",
"Getty Images" is used as a corporate identity for certain of the subsidiaries
of Getty Communications and Hulton Getty is a Getty Trademark.
The foregoing description of the Trademark Option Agreement is
qualified in its entirety by reference to such agreement, a copy of which is
attached hereto as Exhibit 6.
F. PLEDGE AGREEMENT
On June 28, 1996, Jan D. Moehl, Officer of Getty Investments, entered
into a pledge agreement (the "Pledge Agreement") with the Trustees of the Cheyne
Walk Trust. Pursuant to the Pledge Agreement, Jan D. Moehl pledged 10,000
American Depositary Shares of Getty Communications, representing 20,000 Getty
Communications Class A Ordinary Shares, to the Trustees of the Cheyne Walk Trust
as security for a five-year fully amortizing loan made to acquire such Getty
Communications Class A Shares. Upon the consummation of the Transactions, those
10,000 American Depository Shares pledged by Jan D. Moehl in accordance with the
Pledge Agreement were exchanged for 10,000 Shares. The Cheyne Walk Trust
maintains a security interest in those 10,000 Shares.
The foregoing description of the Pledge Agreement is qualified in its
entirety by reference to such agreement, a copy of which is attached hereto as
Exhibit 7.
12
<PAGE>
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Description Exhibit Number
-------------------------------------- ---------------------------------------
Subscription Agreement, dated February 1
9, 1988, by and between Getty
Investments L.L.C. and Getty Images,
Inc.
Stockholders' Agreement, dated as of 2
February 9, 1998, by and among
(i) Getty Images, Inc., (ii) Getty
Investments L.L.C., Mark Getty,
Jonathan Klein, Crediton Limited and
the October 1993 Trust and (iii) PDI,
L.L.C., Mark Torrance and Wade
Torrance
The Restated Getty Parties' 3
Shareholders Agreement, dated as of
February 9, 1998, among Getty
Investments L.L.C., Abacus (C.I.) Ltd.
as the Trustee of the October 1993
Trust, Crediton Limited, Mark H. Getty
and Jonathan D. Klein
Registration Rights Agreement, dated 4
February 9, 1998, between Getty
Images, Inc. and Getty Investments
L.L.C.
Restated Option Agreement, dated 5
February 9, 1998, by and between Getty
Investments L.L.C., Getty Images, Inc.
and Getty Communications plc
13
<PAGE>
Description Exhibit Number
-------------------------------------- ---------------------------------------
Pledge Agreement, dated June 28, 1996, 6
by and between Jan D. Moehl and the
Trustees of the Cheyne Walk Trust
14
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
February 19, 1998 GETTY INVESTMENTS L.L.C.
By: /S/ JAN D. MOEHL
--------------------------------------
Name: Jan D. Moehl
Title: Officer
15
<PAGE>
Schedule I
The name and present principal occupation of each of the executive
officers and directors of Getty Investments L.L.C. are set forth below. Unless
otherwise noted, each of these persons are United States citizens. Their
respective business addresses are set forth below.
Position with Getty
-------------------
Name Investments Principal Occupation
---- ----------- --------------------
- --------------------------------------------------------------------------------
Mark H. Getty Chairman of the Board, Co-Chairman of the Board
(Irish citizenship) Director of Getty Images, Inc.
122 South Michigan Avenue
Suite 900
Chicago, Illinois 60606
- --------------------------------------------------------------------------------
Jonathan D. Klein Director Chief Executive Officer
(United Kingdom of Getty Images, Inc.
citizenship) 122 South Michigan Avenue
Suite 900
Chicago, Illinois 60606
- --------------------------------------------------------------------------------
Andrew S. Garb Director Attorney
Loeb & Loeb
1000 Wilshire Boulevard
Suite 1800
Los Angeles, CA 90017
- --------------------------------------------------------------------------------
William A. Newsom Director President
Newsom Investments Ltd.
3717 Buchanan Street
Second Floor
San Francisco, CA 94123
- --------------------------------------------------------------------------------
Christopher R. Getty Director President
Peak LLC
126 East 56th Street,
24th Floor
New York, NY 10022
- --------------------------------------------------------------------------------
Thomas E. Woodhouse Director Administrator
Gordon P. Getty Family
Trust
Ronald Family Trust A
1325 Airmotive Way, Suite
264
Reno, NV 89502
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
Jan D. Moehl Officer Chief Operating Officer
Cheyne Walk Trust
1325 Airmotive Way, Suite
262
Reno, NV 89502
- --------------------------------------------------------------------------------
17
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
- --------------------------------------------------------------------------------
1 Subscription Agreement, dated February 9, 1988,
by and between Getty Investments and Issuer
2 Stockholders' Agreement, dated as of February
9, 1998, by and among (i) Getty Images, Inc.,
(ii) Getty Investments L.L.C., Mark Getty, Jonathan
Klein, Crediton Limited and the October 1993
Trust and (iii) PDI, L.L.C., Mark Torrance and
Wade Torrance
3 The Restated Getty Parties' Shareholders
Agreement, dated as of February 9, 1998, among
Getty Investments L.L.C., Abacus (C.I.) Ltd. as
the Trustee of the October 1993 Trust, Crediton
Limited, Mark H. Getty and Jonathan D. Klein
4 Registration Rights Agreement, dated February
9, 1998, between Getty Images, Inc. and Getty
Investments L.L.C.
5 Restated Option Agreement, dated February 9,
1998, by and between Getty Investments L.L.C.,
Getty Images, Inc. and Getty Communications plc
6 Pledge Agreement, dated June 28, 1996, by and
between Jan D. Moehl and the Trustees of the
Cheyne Walk Trust
18
<PAGE>
Getty Investments L.L.C.
1325 Airmotive Way
Suite 262
Reno, NV 89502
February 9, 1998
Getty Images, Inc.
101 Bayham Street
London NW1 0AG England
Dear Sirs:
Getty Investments L.L.C., a limited liability company organized
under the laws of the State of Delaware ("GETTY INVESTMENTS"), hereby
subscribes for and offers to purchase, upon and subject to the conditions set
forth below, 1,518,644 validly issued, fully paid and nonassessable shares
(the "SHARES") of Common Stock, par value $0.01 per share ("COMMON STOCK"),
of Getty Images, Inc., a Delaware corporation ("GETTY IMAGES"), and to pay
therefor in lawful money $18.4375 per share or $28 million in the aggregate,
by wire transfer in immediately available funds.
The obligations of Getty Investments to subscribe for, and the
obligations of Getty Images to issue to Getty Investments, the Shares pursuant
to this agreement shall be subject to:
(i) completion, on or prior to February 9, 1998, of the transactions
contemplated in the Merger Agreement, dated as of September 15,
1997, among Getty Images, Getty Communications plc, PhotoDisc, Inc.
and Print Merger, Inc.;
(ii) the execution and delivery by the Company and Getty Investments of
the Registration Rights Agreement between the Company and Getty
Investments, substantially in the form agreed between the parties
prior to the date hereof;
(iii) the execution and delivery by the Company, Getty Investments and
the Investors named therein of the Restated Shareholders Agreement
among the Company, Getty Investments and the Investor named
therein, substantially in the form agreed between the parties prior
to the date hereof; and
(iv) Getty Investments having received a legal opinion from Shearman &
Sterling substantially in the form agreed between the parties prior
to the date hereof.
Getty Investments hereby represents and warrants to Getty Images
that:
(i) it understands and acknowledges that the issuance and subscription
of the Shares pursuant to this letter agreement have not been, and
will not be, registered under the the U.S. Securities Act of 1933,
as amended (the "SECURITIES ACT"), and that the Shares will be
issued to it in a transaction that
<PAGE>
2
is exempt from the registration requirements of the Securities Act
in reliance upon the representations and warranties of Getty
Investments in this agreement. It understands and acknowledges
that the Shares cannot be offered or resold within the United
States or to or for the account or benefit of U.S. persons except
pursuant to registration under the Securities Act or an available
exemption from registration and it agrees that it shall not resale
the Shares except in compliance with applicable securities laws;
(ii) it is purchasing the Shares for its own account for investment and
not with a view to, or for resale in connection with, the
distribution hereof, and it has no present intention of
distributing any thereof;
(iii) it understands and acknowledges that all certificates representing
the Shares shall bear, in addition to any other legends required
under applicable securities laws, the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares have
been acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning of
the Securities Act of 1933 and may not be sold, pledged or
otherwise tranferred except in accordance with an exemption from
the registration requirements of the Securities Act of 1933.";
(iv) it is an accredited investor within the meaning of Regulation D
under the Securities Act and it has such knowledge and experience
in financial and business matters that it is capable of evaluating
the merits and risks of its investment in the Shares pursuant to
this agreement;
(v) it has the financial ability to bear the economic risk of its
investment in the Shares pursuant to this agreement, it is aware
that it may be required to bear the economic risk of its investment
in the Shares for an indefinite period of time and it has no need
for liquidity with respect to its investment therein at this time;
(vi) the Shares were not offered or sold to Getty Investments by any
form of general solicitation or general advertising; and
(vii) it has been furnished with a copy of the prospectus of Getty
Images, Inc. dated January 7, 1998 and has been given the
opportunity to ask questions of, and receive answers from, Getty
Images concerning the terms and conditions of its investment in the
Shares and other matters pertaining to its investment in the
Shares.
This letter agreement shall be governed by the laws of the State of
New York and shall only be amended by written consent of Getty Investments and
Getty Images.
<PAGE>
Please confirm the above and accept this offer by signing in the
space provided below.
Very truly yours,
GETTY INVESTMENTS L.L.C.
By: /s/ Jan D. Moehl
-------------------------
Name: Jan D. Moehl
Title: Officer
Accepted and confirmed
as of February 9, 1998:
GETTY IMAGES, INC.
By: /s/ Mark Getty
---------------------------
Name: Mark Getty
Title: President
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
---------------------------------
STOCKHOLDERS' AGREEMENT
---------------------------------
AMONG
GETTY IMAGES, INC.,
GETTY INVESTMENTS L.L.C.,
MARK GETTY,
JONATHAN KLEIN,
CREDITON LIMITED,
OCTOBER 1993 TRUST,
PDI, L.L.C.,
MARK TORRANCE,
AND
WADE TORRANCE
Dated as of February __, 1998
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Defined Terms. . . . . . . . . . . . . . . . . . 4
ARTICLE II
BOARD REPRESENTATION
SECTION 2.01. Board Representation . . . . . . . . . . . . . . . . . 4
ARTICLE III
TRANSFERS OF SHARES
SECTION 3.01. Agreement Not to Sell. . . . . . . . . . . . . . . . . 5
SECTION 3.02. Restrictions on Transfer . . . . . . . . . . . . . . . 6
SECTION 3.03. Rights of First Refusal. . . . . . . . . . . . . . . . 6
SECTION 3.04. Transferees to Execute Agreement . . . . . . . . . . . 11
SECTION 3.05. Improper Sale or Encumbrance . . . . . . . . . . . . . 12
SECTION 3.06. Legends . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Expenses.. . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.03. Public Announcements.. . . . . . . . . . . . . . . . . 14
SECTION 4.04. Headings.. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.05. Severability.. . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.06. Entire Agreement.. . . . . . . . . . . . . . . . . . . 15
SECTION 4.07. Assignment.. . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.08. No Third Party Beneficiaries.. . . . . . . . . . . . . 15
SECTION 4.09. Amendment; Waiver; Termination . . . . . . . . . . . . 15
(i)
<PAGE>
TABLE OF CONTENTS
(Continued)
Page
----
SECTION 4.10. Governing Law; Dispute Resolution. . . . . . . . . . . 15
SECTION 4.11. Counterparts.. . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.12. Specific Performance.. . . . . . . . . . . . . . . . . 16
SECTION 4.13. All Shares Subject to this Agreement.. . . . . . . . . 16
(ii)
<PAGE>
STOCKHOLDERS' AGREEMENT (this "AGREEMENT") dated as of February 9,
1998 among Getty Images, Inc., a Delaware corporation ("GETTY IMAGES"), and
(a) Getty Investments L.L.C. ("GETTY INVESTMENTS"), Mark Getty, Jonathan Klein,
Crediton Limited and October 1993 Trust and (b) PDI, L.L.C. ("PDI"), Mark
Torrance and Wade Torrance (each of the foregoing (except Getty Images) being a
"STOCKHOLDER" and collectively, the "STOCKHOLDERS").
WHEREAS, Getty Images, Getty Communications plc, a public limited
company organized under the laws of England and Wales ("GETTY COMMUNICATIONS"),
Photodisc, Inc. a Washington corporation ("PHOTODISC"), and Print Merger, Inc.,
a Washington corporation and a wholly owned subsidiary of Getty Images ("MERGER
SUB") entered into the Merger Agreement dated as of September 15, 1997 (the
"MERGER AGREEMENT"), which provides, upon the terms and subject to the
conditions thereof, for the merger of Merger Sub and PhotoDisc; and
WHEREAS, it is a condition to the consummation of the transactions
contemplated under the Merger Agreement that the parties hereto enter into this
Agreement;
NOW, THEREFORE, in consideration of the forgoing and the mutual
agreements and covenants hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this agreement, the
following terms have the following meanings:
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"BENEFICIAL OWNER" or "BENEFICIALLY OWN" has the meaning given such
term in Rule 13d-3 under the Exchange Act, PROVIDED that beneficial ownership
under Rule 13d-3(d)(1)(i) shall be determined based on whether a Person has a
right to acquire beneficial ownership within 60 days or thereafter.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public
<PAGE>
2
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from any of Standard & Poor's Corporation, Moody's Investors Service, Inc. or
Duff & Phelps Credit Rating Co. or (c) commercial paper maturing not more than
one year from the date of issuance thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard & Poor's Corporation
or Moody's Investors Service, Inc.
"CASHLESS EXERCISE OF OPTIONS" means sales of Shares of Common Stock
in connection with the simultaneous exercise of options to purchase Shares of
Common Stock to the extent required to pay the applicable exercise price.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
Getty Images.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise. Control shall be conclusively presumed when
any Person directly or indirectly owns 50% or more of the voting securities of
another Person.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien,
charge, adverse claim, preferential arrangement or restriction or other
encumbrance of any kind.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GETTY GROUP" means Getty Investments, Mark Getty, Jonathan Klein,
Crediton Limited and October 1993 Trust, and any other Person constituting a
Permitted Transferee of the foregoing Persons under clauses (ii), (iii) or (iv)
of the definition of Permitted Transferee.
"GROUP" means either the Getty Group or the Torrance Group.
"MARKETABLE SECURITIES" means securities that are (a) (i) securities
of or other interests in any Person that are traded on a national securities
exchange or reported on by the National Association of Securities Dealers
Automated Quotation System or (ii) debt securities on market terms of an issuer
that has debt or equity securities that are so traded or so reported on and in
which a nationally recognized securities firm has agreed to make a market, and
(b) not subject to restrictions on transfer as a result of any applicable
contractual provisions or the provisions of the Securities Act or, if subject to
such restrictions under the
<PAGE>
3
Securities Act, are also subject to registration rights reasonably acceptable to
the Person receiving such securities.
"PERMITTED TRANSFEREE" means (i) Getty Images or any Subsidiary, (ii)
in the case of any Stockholder who is a natural person, a Person to whom shares
of Common Stock are transferred from such Stockholder by gift, will or the laws
of descent and distribution, (iii) any other member of the Getty Group or the
Torrance Group, as the case may be (and any Permitted Transferee of such Group),
(iv) any "affiliate" of any Stockholder, including, without limitation, any
trust, partnership or limited liability company that a Stockholder controls or
is a beneficiary of, or any Person that is a member or a beneficiary of any
Stockholder or a beneficiary of any such trust, and any partnership or limited
liability company controlled by two or more of such trusts or beneficiaries of
such trust or trusts, or (v) with respect only to the taking of an Encumbrance
on Shares, any commercial bank or other financial institution that lends funds
to a Stockholder on condition of taking such Encumbrance in such Stockholder's
Shares.
"PERSON" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization, joint venture or other entity,
as well as any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.
"RULE 144 TRANSACTION" means any Sale of Shares within the volume
limitations of Rule 144(e) under the Securities Act (as in effect on the date
hereof) (or, if the seller is entitled to rely upon paragraph (k) of Rule 144,
within two times the volume limitations of Rule 144(e) that would have applied
if the seller was not entitled to rely upon paragraph (k) of Rule 144) to a
Person who, to the knowledge of the seller, does not beneficially own more than
5% of the then outstanding Common Stock.
"SALE" means any sale, assignment, transfer, distribution, gift or
other disposition of shares or of a participation therein, whether voluntarily
or by operation of law.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SHARE" means any share of Common Stock and any securities issued in
respect thereof.
"SUBSIDIARY" means any and all corporations, partnerships, joint
ventures, associations and other entities controlled by Getty Images directly or
indirectly through one or more intermediaries.
<PAGE>
4
"TORRANCE GROUP" means PDI, Mark Torrance and Wade Torrance, and any
other Person constituting a Permitted Transferee of the foregoing Persons under
clauses (ii), (iii) or (iv) of the definition of Permitted Transferee.
"THIRD PARTY" means, with respect to any Stockholder, any other Person
(other than a Permitted Transferee of such Stockholder).
SECTION 1.02. OTHER DEFINED TERMS. The following terms shall have
the meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Accepting Party 3.03(b)
Board 2.01(a)
Notice of Acceptance 3.03(b)
Offer 3.03(a)
Offered Shares 3.03(a)
Offer Notice 3.03(a)
Offer Price 3.03(a)
Other Stockholders 3.03(a)
Prospective Seller 3.03(a)
Prospective Transferee 3.04(a)
Restricted Period 3.01(a)
</TABLE>
ARTICLE II
BOARD REPRESENTATION
SECTION 2.01. BOARD REPRESENTATION. (a) Each of the Getty Group and
the Torrance Group shall have the right to nominate one director to the Board of
Directors of Getty Images (the "BOARD") whenever such class of directors is
subject to an election; PROVIDED, HOWEVER, that the Torrance Group shall not
have such right for so long as Mark Torrance is an employee of Getty Images and
a member of the Board; and PROVIDED FURTHER, that such right shall terminate
with respect to either the Torrance Group or the Getty Group, as the case may
be, once such Group beneficially owns fewer than the greater of (i) 3,000,000
shares of Common Stock (subject to equitable adjustment in the event of stock
splits, stock dividends and similar events) and (ii) such number of shares of
Common Stock as is equal to 2% of the then outstanding shares of Common Stock.
Such right shall be in addition to any other voting rights that each Stockholder
may have with respect to its Shares.
<PAGE>
5
(b) For so long as the Getty Group has the right to nominate one
director to the Board pursuant to Section 2.01(a), the Getty Group shall also
have the right to appoint the Chairman of the Board from among the directors of
Getty Images; PROVIDED, HOWEVER, that the Getty Group shall not have such right
for so long as either Mark Torrance or Mark Getty is the Chairman or a
Co-Chairman of the Board.
(c) The Stockholders agree to take such actions within their control
as are necessary to implement the agreements set forth in Sections 2.01(a) and
2.01(b), including the voting of their respective Shares in favor of the Board
nominees designated by the Getty Group and the Torrance Group in accordance with
this Section 2.01.
(d) Getty Images shall include as a nominee for the Board recommended
by the Board the person designated by each of the Getty Group and the Torrance
Group in accordance with Section 2.01(a) and shall nominate such person and use
its reasonable best efforts to cause the election of such person, unless the
Board of Directors of Getty Images, in the exercise of its fiduciary duties,
reasonably shall determine that such person is not qualified to serve on the
Board. If the Board reasonably determines that such designee is not so
qualified, the Group designating such nominee shall have the opportunity to
specify one additional designee who shall be so included as a nominee subject to
the qualification set forth in the immediately preceding sentence.
(e) In the event that a vacancy is created at any time by the death,
disability, resignation or removal of any director nominated by the Getty Group
or the Torrance Group, the nominating Group shall have the right to designate a
replacement director to fill such vacancy (provided that such Group would be
entitled at that time to nominate a director pursuant to Section 2.01(a)) and
Getty Images and the Stockholders agree to take such actions within their
control as are necessary to implement the agreements set forth in this Section
2.01(e).
(f) To the extent not already proposed pursuant to Exhibit 7.11 of
the Merger Agreement, Mark Torrance may propose to the Board of Directors of
Getty Images non-employees with appropriate industry experience to fill two
vacancies on the Board of Directors of Getty Images as of the date hereof. The
Board of Directors of Getty Images shall consider any proposed appointee in good
faith.
ARTICLE III
TRANSFERS OF SHARES
SECTION 3.01. AGREEMENT NOT TO SELL. (a) Except with the prior
written consent of Getty Images, no Stockholder shall sell any Shares until the
earlier of (i) the date
<PAGE>
6
six months after the date of this Agreement and (ii) the time of the
effectiveness of a registration statement filed by Getty Images under the
Securities Act pursuant to which stockholders of Getty Images sell Shares (such
period being the "RESTRICTED PERIOD"); PROVIDED, HOWEVER, that during the
Restricted Period, the Getty Group or the Torrance Group, as the case may be,
may each sell up to 200,000 Shares in a Rule 144 Transaction or in a Cashless
Exercise of Options.
(b) After the expiration of the Restricted Period, no Stockholder
shall, directly or indirectly, make or solicit any Sale of, or create, incur,
solicit or assume any Encumbrance with respect to, any Share, except in
compliance with the Securities Act and this Agreement.
SECTION 3.02. RESTRICTIONS ON TRANSFER. Each Stockholder agrees that
it will not, directly or indirectly, make or solicit any Sale of, or create,
incur, solicit or assume any Encumbrance with respect to, any Share beneficially
owned by such Stockholder other than (i) any Sale to a Permitted Transferee or
the granting of any Encumbrance to a Permitted Transferee, (ii) any Sale that is
made in compliance with the procedures, and subject to the limitations, set
forth in Section 3.03 or any Sale made to any Third Party after the termination
of Section 3.03 pursuant to subparagraph (g) thereof, (iii) any Sale pursuant to
a public offering of shares of Common Stock pursuant to an effective
registration statement under the Securities Act in which, to the knowledge of
the selling Stockholder, no one Person shall purchase more than five percent of
the then outstanding shares of Common Stock, or (iv) any Sale pursuant to a Rule
144 Transaction or in a Cashless Exercise of Options. Notwithstanding the
foregoing, except as otherwise expressly provided in this Agreement, all Sales
permitted by the foregoing clauses (i) through (iv) shall be subject to, and
shall not be made other than in compliance with, the provisions of Sections
3.01, 3.04, 3.05 and 3.06.
SECTION 3.03. RIGHTS OF FIRST REFUSAL. (a) If at any time any
Stockholder receives from or otherwise negotiates with a Third Party a bona fide
offer to purchase for cash, Cash Equivalents or Marketable Securities or other
securities reasonably subject to valuation in the manner set forth in Section
3.03(b)(ii) below (for purposes of this Section 3.03, an "OFFER") any of the
Shares owned or held by such Stockholder, and such Stockholder intends to sell
such Shares to such Third Party, such Stockholder (for purposes of this Section
3.03, the "PROSPECTIVE SELLER") shall provide Getty Images and each of the other
Stockholders in the Group in which the Prospective Seller is not a member (for
purposes of this Section 3.03, the "OTHER STOCKHOLDERS") written notice of such
offer (for purposes of this Section 3.03, an "OFFER NOTICE"). The Offer Notice
shall identify the Third Party making the Offer, the number of Shares with
respect to which the Prospective Seller has such an Offer (for purposes of this
Section 3.03, the "OFFERED SHARES"), the consideration per Share at which a sale
is proposed to be made (for purposes of this Section 3.03, the "OFFER PRICE"),
and all other material terms and conditions of the Offer, including, without
<PAGE>
7
limitation, a description of any non-cash consideration sufficiently detailed to
permit valuation thereof, as well as a copy of the Offer, if available and
permitted pursuant the terms thereof. For avoidance of doubt, the Offer Price
may be expressed as an amount correlated to the price of the publicly traded
Common Stock determined as of a particular date or over a particular period.
(b) (i) The receipt of an Offer Notice by Getty Images and the
Other Stockholders from a Prospective Seller shall constitute an offer by such
Prospective Seller to sell to Getty Images and each Other Stockholder all (but
not less than all) of the Offered Shares at the Offer Price per Share in cash
(subject to the valuation procedures set forth in Section 3.03(b)(ii) below if
the Offer Price includes any non-cash consideration). Such offer shall be
irrevocable for 10 days after receipt of such Offer Notice by Getty Images and
each Other Stockholder. During such 10-day period, Getty Images and each Other
Stockholder shall, subject to the priorities set forth in Section 3.03(b)(iii),
have the right to accept such offer as to any or all of the Offered Shares by
giving a written notice of acceptance (for purposes of this Section 3.03, a
"NOTICE OF ACCEPTANCE") to the Prospective Seller prior to the expiration of
such 10-day period (for purposes of this Section 3.03, Getty Images or any Other
Stockholder so accepting such offer being an "ACCEPTING PARTY"). In the event
that within five days prior to the expiration of such 10-day period the
Prospective Seller shall not have received Notices of Acceptance for all of the
Offered Shares, the Prospective Seller shall notify each Accepting Party of such
fact and shall provide each Accepting Party an opportunity to submit an
additional Notice of Acceptance for any such remaining Offered Shares prior to
the expiration of such 10-day period. In the event that after the expiration of
such 10-day period (as may be extended pursuant to Section 3.03(b)(ii)(B)) the
Prospective Seller shall not have received Notices of Acceptance for all of the
Offered Shares, the Prospective Seller shall have the right to reject any or all
Notices of Acceptance theretofore received and to sell Shares in accordance with
Section 3.03(d).
(ii) If the Offer Price specified in the Offer Notice includes any
Cash Equivalents, Marketable Securities or other securities reasonably subject
to valuation in the manner set forth below, such Offer Price shall be deemed to
be the amount of any cash included in the Offer Price plus the value (as jointly
determined by two nationally recognized investment banking firms, one of whom
shall have been selected by Getty Images and other of whom shall have been
selected by the Prospective Seller) of such non-cash consideration included in
the Offer Price. For this purpose:
(A) the parties shall use their best efforts to cause any
determination of the value of any such non-cash consideration included in
the Offer Price to be made within three business days after the date of
receipt of the Offer Notice by Getty Images and the Other Stockholders. If
the firms selected by Getty Images and the Prospective Seller are unable to
agree upon the value of any such non-cash consideration within such
three-day period, the value of such non-cash consideration
<PAGE>
8
shall be deemed to be the average of the valuations determined by each
investment bank; and
(B) notwithstanding Section 3.03(b)(i), the date by which Getty
Images and the Other Stockholders must exercise their rights of first
refusal under this Section 3.03 shall be extended until three days after
the determination of the value of such non-cash consideration.
(iii) Getty Images and each Other Stockholder shall be entitled to
accept such offer from the Prospective Seller in the following order of
priority:
FIRST, Getty Images shall be entitled to accept such offer for any or
all of the Offered Shares;
SECOND, if Getty Images shall not have accepted such offer for all the
Offered Shares, each Other Stockholder shall be entitled to
accept such offer for any or all of the remaining Offered
Shares (PROVIDED, HOWEVER, that if Notices of Acceptance are
received from Other Stockholders in respect of more than the
number of remaining Offered Shares, each Other Stockholder
shall be entitled to accept such offer for not more than the
portion of the remaining Offered Shares determined on a pro
rata basis based on the ratio of the number of Shares then
owned by such Other Stockholder to the number of Shares then
owned by all Other Stockholders who have submitted Notices of
Acceptance); and
THIRD, if Getty Images and one or more of the Other Stockholders have
not accepted such offer for all the Offered Shares, each Other
Stockholder shall then be entitled to accept such offer for not
more than the portion of the remaining Offered Shares
determined on a pro rata basis based on the ratio of the number
of Offered Shares specified in such Other Stockholder's Notice
of Acceptance in respect of which such Other Stockholder shall
not be entitled to accept the Prospective Seller's offer as a
result of the application of the proviso contained in clause
SECOND above to the number of Offered Shares specified in all
such Other Stockholders' Notices of Acceptance in respect of
which such Other Stockholders shall not be entitled to accept
the Prospective Seller's offer as a result of the application
of the proviso contained in clause SECOND above (it being
understood that each such Other Stockholder shall be entitled
to indicate its interest in accepting more than its pro rata
share of the remaining Offered Shares and to accept the
Prospective Seller's offer with respect to (A) such additional
Offered Shares if all the Offered Shares are not otherwise
accepted pursuant to
<PAGE>
9
clauses FIRST, SECOND and THIRD or (B) such Offered Shares that
remain unsold as described in Section 3.03(d)(ii) below).
If Getty Images or any Other Stockholder so accepts the Prospective
Seller's offer, such Accepting Party will purchase for cash from the Prospective
Seller, and the Prospective Seller will sell to such Accepting Party, such
number of Offered Shares as to which such Accepting Party shall have accepted
the Prospective Seller's offer (which must total, as to all Accepting Parties,
all of the Offered Shares). The price per Share to be paid by such Accepting
Party shall be the Offer Price specified in the Offer Notice, payable in
accordance with the terms of the Offer by the Prospective Seller specified in
Section 3.03(b)(i) (or in cash if the Offer Price includes any non-cash
consideration, subject to the valuation procedures set forth in Section
3.03(b)(ii)). The Notice of Acceptance shall specify (i) such Accepting Party's
Acceptance of the Prospective Seller's offer and (ii) the number of Offered
Shares to be purchased by such Accepting Party. If, collectively, the Accepting
Parties shall not have accepted the Prospective Seller's offer as to all of the
Offered Shares, the Prospective Seller shall have the right to reject any or all
Notices of Acceptance theretofore received and to sell Shares in accordance with
Section 3.03(d).
(c) The consummation of any such purchase by and sale to any
Accepting Party shall take place on such date, not later than 20 days after
receipt of the latest Notice of Acceptance timely received by the Prospective
Seller, as such Accepting Party and the Prospective Seller shall select. Upon
the consummation of such purchase and sale, the Prospective Seller shall,
against delivery by the relevant Accepting Party of the Offer Price multiplied
by the number of Shares being purchased by such Accepting Party, (i) deliver to
the Accepting Party certificates evidencing the Offered Shares purchased and
sold, duly endorsed in blank or accompanied by written instruments of transfer
in form and substance satisfactory to such Accepting Party and duly executed by
the Prospective Seller, and (ii) shall assign all its rights under this
Agreement with respect to the Offered Shares purchased and sold pursuant to an
instrument of assignment reasonably satisfactory to such Accepting Party.
(d) In the event that:
(i) Getty Images and each Other Stockholder shall have received an Offer
Notice from a Prospective Seller but the Prospective Seller shall not
have received from Getty Images and one or more Other Stockholders
Notices of Acceptance as to all the Offered Shares prior to the
expiration of the 10-day period following receipt of such Offer Notice
(as may be extended pursuant to Section 3.03(b)(ii)(B)) or
(ii) (x) an Accepting Party shall have given a Notice of Acceptance
to the Prospective Seller but shall have failed to
consummate, other than as a
<PAGE>
10
result of the fault of the Prospective Seller, a purchase of
the Offered Shares with respect to which such Notice of
Acceptance was given within 20 days after receipt of the
Notice of Acceptance by the Prospective Seller and
(y) one or more Other Stockholders shall not have indicated an
interest upon any such failure to buy such Shares as
provided in clause (B) of the parenthetical phrase following
clause THIRD of Section 3.03(b)(iii) and shall not have
indicated that they are prepared to purchase such Shares
within five days of their receipt of a notice of such
failure from the Prospective Seller and
(z) Getty Images shall not have indicated an interest in
purchasing such Shares as have not been purchased pursuant
to the immediately preceding clause (y) and shall not have
been prepared to purchase such Shares at the offer price
originally specified in the Offer Notice relating to such
Shares within five days of its receipt of a notice from the
Prospective Seller that such Shares have not been purchased
pursuant to the immediately preceding clause (y),
such Prospective Seller shall have the right to reject any or all Notices of
Acceptance theretofore received, and nothing in this Section 3.03 shall limit
the right of the Prospective Seller to make thereafter a sale of the Offered
Shares so long as all the Offered Shares that are sold or otherwise disposed of
by the Prospective Seller (which number of Offered Shares shall be not less than
the number of Offered Shares specified in such Offer Notice) are sold for cash
or the Offer Consideration (A) within 90 days after the date of receipt of such
Offer Notice by Getty Images and the Other Stockholders, (B) at an amount not
less than the Offer Price included in such Offer Notice, (C) to the Third Party
making the Offer and (D) in compliance with applicable securities laws.
(e) In the event that Getty Images and the Other Stockholders
shall have received an Offer Notice from a Prospective Seller but the
Prospective Seller shall not have received Notices of Acceptance for all the
Offered Shares prior to the expiration of the 10-day period following receipt of
such Offer Notice by Getty Images and the Other Stockholders (as may be extended
pursuant to Section 3.03(b)(ii)(B)) and such Prospective Seller shall not have
sold the remaining Offered Shares before the expiration of the 90-day period in
accordance with paragraph (d) above, then such Prospective Seller shall not give
another Offer Notice for a period of 90 days from the last day of such 90-day
period.
(f) Anything in this Section 3.03 or in Section 3.02 to the
contrary notwithstanding, the provisions of this Section 3.03 will not be
applicable to any Sale or Encumbrance described in Sections 3.02(i), (iii) or
(iv).
<PAGE>
11
(g) The provisions of Sections 2.01(e) and 2.01(d) and Article
III shall terminate and be of no further force and effect with respect to either
the Getty Group or the Torrance Group, as the case may be, on and after the date
on which such Group collectively beneficially owns fewer than the greater of (i)
3,000,000 shares of Common Stock (subject to equitable adjustment in the event
of stock splits, stock dividends and similar events); and (ii) such number of
shares of Common Stock as is equal to 2% of the then outstanding shares of
Common Stock.
SECTION 3.04. TRANSFEREES TO EXECUTE AGREEMENT. (a) Each
Stockholder agrees that it will not, directly or indirectly, make any Sale of,
or create, incur or assume any Encumbrance with respect to, any Shares
beneficially owned by such Stockholder, unless prior to the consummation of any
such Sale or the creation, incurrence or assumption of any such Encumbrance, the
Person to whom such Sale is proposed to be made or the Person in whose favor
such Encumbrance is proposed to be created, incurred or assumed (a "PROSPECTIVE
TRANSFEREE") (i) executes and delivers to Getty Images and each Stockholder an
agreement, in form and substance reasonably satisfactory to Getty Images,
whereby such Prospective Transferee confirms that, with respect to the Shares
that are the subject of such Sale or Encumbrance, it shall be deemed to be a
"Stockholder" for purposes of this Agreement and agrees to be bound by all the
terms of this Agreement, and (ii) unless such Prospective Transferee is an
institutional investor, delivers to Getty Images an opinion of counsel,
satisfactory in form and substance to Getty Images, to the effect that such Sale
or Encumbrance is being conducted in compliance with applicable securities laws
and that the agreement referred to above that is delivered by such Prospective
Transferee is a legal, valid and binding obligation of such Prospective
Transferee enforceable against such Prospective Transferee in accordance with
its terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditor's rights generally and
subject, as to enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). Upon the execution and delivery by such Prospective
Transferee of the agreement referred to in clause (i) of the preceding sentence
and, if required, the delivery of the opinion of counsel referred to in clause
(ii) of the preceding sentence, such Prospective Transferee shall be deemed a
"Stockholder" for purposes of this Agreement and shall have the rights and be
subject to the obligations of a Stockholder under this Agreement, in each case
with respect to the Shares that were transferred to it by a Stockholder
hereunder or in respect of which such Encumbrance shall have been created,
incurred or assumed.
(b) Anything in this Section 3.04 or in Section 3.02 to the
contrary notwithstanding, the provisions of this Section 3.04 will not be
applicable to (i) any Sale of Shares pursuant to a public offering of shares of
Common Stock pursuant to an effective registration statement under the
Securities Act, (ii) any Sale of Shares in a Rule 144 Transaction or in a
Cashless Exercise of Options or (iii) any Sale of Shares to a Third Party
<PAGE>
12
in accordance with Section 3.03(d) after complying with the right of first
refusal requirements of Section 3.03.
SECTION 3.05. IMPROPER SALE OR ENCUMBRANCE. Any attempt not in
compliance with this Agreement to make any Sale of, or create, incur or assume
any Encumbrance with respect to, any Shares shall be null and void and of no
force and effect, the purported transferee shall have no rights or privileges in
or with respect to Getty Images, and Getty Images shall not give any effect in
Getty Images's stock records to such attempted Sale or Encumbrance.
SECTION 3.06. LEGENDS. (a) For so long as Shares beneficially
owned by a Stockholder are subject to the voting obligations and restrictions on
transfer set forth in Article II and in this Article III, certificates
evidencing such Share shall bear a legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VOTING
OBLIGATIONS AND RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCKHOLDERS'
AGREEMENT, DATED AS OF FEBRUARY 9, 1998, AS IT MAY BE AMENDED FROM TIME TO
TIME, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
GETTY IMAGES. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE
ON THE BOOKS OF GETTY IMAGES UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE
BEEN COMPLIED WITH."
(b) In the event that any Shares shall cease to be subject to
the voting obligations or restrictions on transfer set forth in Article II or in
this Article III, Getty Images shall, upon the written request of the holder
thereof, issue to such holder a new certificate evidencing such Shares without
the relevant legend.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. EXPENSES. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 4.02. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be
<PAGE>
13
deemed to have been duly given or made upon receipt) by delivery in person, by
courier service, by cable, by facsimile, by telegram, by telex or by registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 4.02):
(a) if to Getty Images or members of the Getty Group other than Getty
Investments:
Getty Images, Inc.
500 North Michigan Avenue
Suite 1700
Chicago, Illinois 60611
Facsimile: (1312) 922-9075
Attention: Andrew Duncomb
with a copy to each of:
Getty Communications plc
101 Bayham Street
London NW1 0AG England
Facsimile: (44171) 267-6540
Attention: Nick Evans-Lombe
Clifford Chance
200 Aldersgate Street
London EC1A 4JJ England
Facsimile: (44171) 600-5555
Attention: Michael Francies
Shearman & Sterling
555 California Street
San Francisco, California 94104
Facsimile: (415) 616-1199
Attention: Christopher D. Dillon
(b) if to Getty Investments:
Getty Investments L.L.C.
1325 Airmotive Way, Suite 262
Reno, Nevada 89502
Facsimile: (702) 786-5414
<PAGE>
14
Attention: Jan D. Moehl
Mark J. Jenness
(c) if to members of the Torrance Group:
PhotoDisc, Inc.
2013 Fourth Avenue
4th Floor
Seattle, WA 98121
Facsimile: (206) 441-9379
Attention: Mark Torrance
with a copy to:
Graham & James LLP/Riddell Williams P.S.
1001 Fourth Avenue Plaza
Suite 4500
Seattle, Washington 98154-1085
Facsimile: (206) 389-1708
Attention: John Steel
SECTION 4.03. PUBLIC ANNOUNCEMENTS. No party to this Agreement
shall make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the other
party (except to the extent that such disclosure is required by law or the rules
of the Nasdaq National Market), and, to the extent practicable, the parties
shall cooperate as to the timing and contents of any such press release or
public announcement.
SECTION 4.04. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 4.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions
<PAGE>
15
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.
SECTION 4.06. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and undertakings, both written and
oral, among the parties hereto with respect to the subject matter hereof, except
as otherwise expressly provided herein.
SECTION 4.07. ASSIGNMENT. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and shall inure solely to the
benefit of the parties hereto and their respective successors and permitted
assigns; PROVIDED, HOWEVER, that this Agreement shall not inure to the benefit
of any transferee unless such transferee shall have complied with the terms of
Section 3.04. No Stockholder may assign any of its rights hereunder to any
Person other than a transferee that has complied with the requirements of
Section 3.04 in all respects.
SECTION 4.08. NO THIRD PARTY BENEFICIARIES. Nothing herein, express
or implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 4.09. AMENDMENT; WAIVER; TERMINATION. Any term of this
Agreement may be amended or modified, and the observance of any term may be
waived, only by an instrument in writing signed by Getty Images and Stockholders
in each of the Getty Group and the Torrance Group holding Shares representing a
majority of the Shares then held by Stockholders in such Group; provided,
however, that no modification to Sections 2.01 or 4.09 may be made without the
consent of the party affected thereby. Waiver of any term or condition of this
Agreement shall only be effective if it is in writing and shall not be construed
as a waiver of any subsequent breach or waiver of the same term or condition, or
a waiver of any other term or condition of this Agreement. Each Stockholder
shall be bound by any amendment or waiver authorized by this Section 4.09,
whether or not such Stockholder shall have consented thereto. No failure or
delay by any party in exercising any right, power or privilege under this
Agreement shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
This Agreement may be terminated upon the unanimous written consent of the
Stockholders.
SECTION 4.10. GOVERNING LAW; DISPUTE RESOLUTION. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed entirely within
that State. All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined in
<PAGE>
16
any Delaware state or federal court sitting in the State of Delaware. In the
event of any dispute, claim or litigation with regard to this Agreement, the
prevailing party shall be entitled to receive from the non-prevailing party, and
the non-prevailing party shall promptly pay, all reasonable fees and expenses of
counsel for the prevailing party incurred in connection with such dispute, claim
or litigation.
SECTION 4.11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 4.12. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 4.13. ALL SHARES SUBJECT TO THIS AGREEMENT. All Shares shall
be held subject to the terms of this Agreement and the Stockholder thereof shall
be deemed a holder for purposes of this Agreement, as follows:
(i) Any Shares hereafter acquired by any Stockholder shall be held
by such Person subject to the provisions of this Agreement and such Person
shall be deemed to be a Stockholder for purposes of such additional Shares;
and
(ii) Any Stockholder who ceases to own any Shares as provided for in
this Agreement shall cease to be a Stockholder for purposes of such Shares
no longer so owned.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized or in their individual capacities, as applicable.
GETTY IMAGES, INC.
By: /s/ Lawrence Gould
---------------------------
Title: Treasurer
<PAGE>
17
GETTY INVESTMENTS L.L.C.
By: /s/ Jan D. Moehl
---------------------------
Title: Officer
/s/ Mark Getty
------------------------------
Mark Getty
/s/ Jonathan Klein
------------------------------
Jonathan Klein
CREDITON LIMITED
By: /s/ R.L. Breadner
---------------------------
Title: Director
OCTOBER 1993 TRUST
By: /s/ Authorised Signatory
---------------------------
Title: Authorised Signatory
PDI, L.L.C.
By: /s/ Mark Torrance
---------------------------
Title:
/s/ Mark Torrance
------------------------------
Mark Torrance
/s/ Wade Torrance
------------------------------
Wade Torrance
<PAGE>
(1) GETTY INVESTMENTS L.L.C.
(2) THE INVESTORS NAMED HEREIN
(3) GETTY IMAGES, INC.
(4) MARK GETTY AND JONATHAN KLEIN
- --------------------------------------------------------------------------------
RESTATED SHAREHOLDERS AGREEMENT
- --------------------------------------------------------------------------------
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. VOTING ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. PLEDGE OF COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . 4
4. PERMITTED TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. TRANSFERS - GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. LOCK-UP - CREDITON. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. LOCK-UP - OCTOBER TRUST . . . . . . . . . . . . . . . . . . . . . . . . 8
9. SPECIAL LOCK-UP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
10. STOCK CERTIFICATE LEGEND. . . . . . . . . . . . . . . . . . . . . . . . 10
11. NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. APPOINTMENT OF CHAIRMAN OF GETTY IMAGES . . . . . . . . . . . . . . . . 11
13. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
14. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15. CONSEQUENCES OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . 11
16. FURTHER ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
18. RESTRICTIVE TRADE PRACTICES ACT . . . . . . . . . . . . . . . . . . . . 12
19. SATISFACTION OF LEGAL REQUIREMENTS. . . . . . . . . . . . . . . . . . . 12
20. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
21. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
22. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
23. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
24. POWER TO APPOINT, REMOVE AND REPLACE A DIRECTOR OF GETTY INVESTMENTS. . 14
25. CHAIRMAN OF BOARD OF GETTY INVESTMENTS. . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE>
THIS AGREEMENT is made on 9 February 1998
BETWEEN:
(1) GETTY INVESTMENTS L.L.C. a limited liability company organised
pursuant to the Delaware Limited Liability Company Act whose principal
office is at 1325 Airmotive Way, Suite 262, Reno, Nevada 89502-3240
("GETTY INVESTMENTS");
(2) THOSE PERSONS whose names and addresses are set out in Exhibit A
hereto (the "INVESTORS");
(3) GETTY IMAGES, INC, a company incorporated and existing under the laws
of Delaware, with its principal office at 500 North Michigan Avenue,
Suite 1700, Chicago, Illinois, 60611 U.S.A. ("GETTY IMAGES"); and
(4) MARK GETTY and JONATHAN KLEIN, shareholders of Common Stock ("GETTY
AND KLEIN")
WHEREAS
(A) On 8 July 1996 Getty Investments and the Investors entered into a
Shareholders Agreement as amended by a Supplemental Agreement dated 1
November 1996 (collectively the "ORIGINAL SHAREHOLDERS AGREEMENT") to
regulate the conduct of Getty Investments and the Investors in
relation to their direct and indirect investments in Getty
Communications plc ("GETTY COMMUNICATIONS").
(B) The share capital of Getty Communications was divided into A Shares
and B Shares. The A Shares and the B Shares had identical rights
attached to them apart from the voting rights where the B Shares had
ten votes per share and the A Shares had one vote per share.
(C) Getty Investments and the Investors owned 100% of the issued and
allotted B Shares in Getty Communications.
(D) On 15 September 1997 Getty Communications entered into a merger
agreement (the "MERGER AGREEMENT") with PhotoDisc, Inc ("PHOTODISC").
Pursuant to the terms of the Merger Agreement Getty Images was formed
and (i) pursuant to a scheme of arrangement (the "SCHEME OF
ARRANGEMENT") each issued B Share of Getty Communications was
converted into one A Share of Getty Communications, each A Share of
Getty Communications was then transferred to Getty Images and the
holders of Getty Communications A Shares were issued one share of
Common Stock for every two Getty Communications A Shares held and
Getty Communications became a wholly owned subsidiary of Getty Images;
and (ii) PhotoDisc was merged with and into a wholly owned subsidiary
of Getty Images ("MERGERSUB") with MergerSub as the surviving
corporation.
<PAGE>
(E) Following completion of the Merger Agreement Getty Investments has,
through its ownership of Common Stock, a significant interest in Getty
Images.
(F) THIS AGREEMENT is intended to regulate the conduct of Getty
Investments and the Investors in relation to their direct and indirect
investments in Getty Images. By this Agreement the parties wish to
restate the Original Shareholders Agreement in full.
THE PARTIES AGREE in consideration of the mutual terms, covenants and
conditions herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, as follows:
1. INTERPRETATION
1.1 In this Agreement:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly Controlling, directly or indirectly Controlled
by or under direct or indirect common Control with such Person;
"CLOSING PRICE" means with respect to Common Stock, the last reported
sale price on a Trading Day or, in case no such sale takes place on
such day, the average of the reported closing bid and asked prices as
reported on the New York Stock Exchange Composite Tape, or, if such
sales are not so reported, the reported last sale price or, if no such
sale takes place on such day, the average of the reported closing bid
and asked prices on the principal national securities exchange on
which the Common Stock is listed or admitted to trading, or if not
listed or admitted to trading on any national securities exchange, on
the National Association of Securities Dealer Automated Quotations
("NASDAQ") National Market System, or if the Common Stock is not
quoted on such National Market System, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm selected by Getty Images for that
purpose;
"COMMON STOCK" means the shares of Common Stock, par value $0.01 per
share of Getty Images;
"CONTROL" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled Person, whether through
equity ownership, by contract or otherwise;
"CONTROLLING PERSON" means, as to any Person, any one or more Persons
who Control such Person;
"CREDITON" means Crediton Limited and the "Permitted Transferees" of
the Common Stock held by Crediton (if any) pursuant to this Agreement;
"GETTY INVESTMENTS" means Getty Investments and the "Permitted
Transferees" of the Common Stock held by Getty Investments (if any)
pursuant to this Agreement;
<PAGE>
"GROUP" means Getty Images and each Subsidiary thereof;
"INVESTORS" means the Investors listed in Exhibit A hereto, together
with the respective Permitted Transferees of the Common Stock held by
such Persons (if any) pursuant to this Agreement;
"OCTOBER TRUST" means the Trustees of the October 1993 Trust and the
"Permitted Transferees" of the Common Stock held by the October Trust
(if any) pursuant to this Agreement; October Trust is the beneficial
owner of the Common Stock which is registered in the name of Abacus
(C.I.) Limited as trustee of the October 1993 Trust ("ABACUS");
"PARTY" means any party to this Agreement or a Person who becomes a
Party pursuant to the provisions of this Agreement;
"PERMITTED TRANSFEREE" means a Person who is a "permitted transferee"
of Common Stock as set forth in clauses (iii) (with reference to
members of the Getty Group only) and (iv) of the definition of
Permitted Transferee under the Stockholders' Agreement;
"PERSON" means an individual, corporation, general or limited
partnership, limited or unlimited liability company, trust,
association, unincorporated organisation, government or any authority,
agency or body thereof, or other entity and any legal personnel
representative successors and lawful assigns of any of them;
"REGISTRATION RIGHTS AGREEMENTS" means (i) the Registration Rights
Agreement dated 9 February between Getty Images, and Getty Investments
and (ii) the Registration Rights Agreement dated 3 July 1996 and
amended by the Registration Rights Agreement Amendment dated 9
February, among Getty Images, October Trust and Crediton;
"STOCKHOLDERS' AGREEMENT" means the Stockholders' Agreement dated 9
February between Getty Images and (a) Getty Investments, Mark Getty,
Jonathan Klein, Crediton Limited and October 1993 Trust and (b) PDI,
L.L.C., Mark Torrance and Wade Torrance;
"TRADING DAY" means a weekday (except for public holidays and Sundays)
on which the New York Stock Exchange is open for business; and
"TRANSFER" means to sell, assign, pledge, grant a security interest
in, otherwise dispose of, of agree to do any of the foregoing with
respect to the Common Stock.
1.2 In this Agreement, a reference to:
1.2.1 a "SUBSIDIARY" or "HOLDING COMPANY" is to be construed in accordance
with section 736 of the Companies Act 1985;
1.2.2 a statutory provision includes a reference to the statutory provision
as modified or re-enacted or both from time to time whether before or
after the date of this Agreement
<PAGE>
and any subordinate legislation made under the statutory provision
whether before or after the date of this Agreement;
1.2.3 a clause or schedule, unless the context otherwise requires, is a
reference to a clause of or schedule to this Agreement; and
1.2.4 a document is a reference to that document as from time to time
supplemented or varied.
1.3 The headings in this Agreement do not affect its interpretation.
1.4 Getty and Klein are parties to this Agreement solely for the purposes
of clauses 4, 5, 6 and 9 and any other clauses necessary for the
interpretation of clauses 4, 5, 6 and 9.
2. VOTING ARRANGEMENTS
The Parties hereto hereby agree that they shall exercise the voting
rights associated with their Common Stock in such manner as they shall
be directed to do so by the Board of Directors of Getty Investments
from time to time.
2.1 Such direction shall be given by notice in writing sent by Getty
Investments to the Party in question. Any such notice may require the
Party in question to appoint any Person nominated by Getty Investments
as such Party's proxy to attend and vote the Common Stock on behalf of
such Party at any shareholders' meeting of Getty Images.
3. PLEDGE OF COMMON STOCK
No Party shall, except with the prior written consent of the other
Parties (such consent not to be unreasonably withheld), pledge,
mortgage, charge or otherwise encumber any Common Stock or any
interest in any Common Stock, or grant an option over any Common Stock
or any interest in any Common Stock.
4. PERMITTED TRANSFERS
4.1 A Party may at any time Transfer all/or any of its Common Stock (the
"RELEVANT STOCK") to a Permitted Transferee. The Permitted Transferee
may at any time Transfer all the Relevant Stock back to the said Party
or another Permitted Transferee of the said Party.
4.2 If Relevant Stock has been Transferred under clause 4.1 (whether
directly or by a series of Transfers) by a Party (the "TRANSFEROR"
which expression shall include a second or subsequent Transferor in
the case of a series of Transfers) to its Permitted Transferee (the
"TRANSFEREE") and subsequently the Transferee ceases to be a Permitted
Transferee pursuant to this Agreement then the Transferee shall
forthwith Transfer the Relevant Stock back to the Transferor or at the
Transferor's option to another Permitted Transferee. If the
Transferee fails to Transfer the Relevant Stock within thirty days of
the Transferee ceasing to be a Permitted Transferee then the
Transferee shall be deemed to have served a Transfer Notice pursuant
to clause 5
<PAGE>
in respect of all the Relevant Stock, with the Transfer Price being
determined pursuant to clause 5.2.3. The Transfer Notice shall not be
withdrawn in any circumstances.
5. TRANSFERS
5.1 Subject to clause 4, a Party (the "VENDOR") who wishes to Transfer any
Common Stock or any interest in any Common Stock shall give notice in
writing (the "TRANSFER NOTICE") to Getty Investments of its desire to
do so.
5.2 The Transfer Notice:
5.2.1 shall specify the identity of a bona fide purchaser (the "PURCHASER")
or that the Common Stock is to be Transferred pursuant to the exercise
of rights under the Registration Rights Agreement or other securities
law exemption;
5.2.2 shall specify the number of shares desired to be Transferred (the
"OFFERED STOCK");
5.2.3 shall specify the bona fide price per share which the Purchaser is
willing to pay for the Offered Stock or in the case of a Transfer
pursuant to the exercise of rights under the Registration Rights
Agreement the average of the Closing Prices on the ten previous
Trading Days;
5.2.4 shall, without prejudice to the right of Getty Investments to purchase
all or any part thereof, constitute Getty Investments by its Directors
as the Vendor's agents to offer and sell the Offered Stock in
accordance with the terms of this Agreement at the price per share
specified in the Transfer Notice; and
5.2.5 shall not be withdrawn except as provided in paragraph 5.5.2(a).
5.3 Getty Investments shall serve a copy of the Transfer Notice on each of
the Parties hereto (other than the Vendor) which are then stockholders
of Getty Images ("MEMBER") which term shall include Getty Investments
if it is then a member of Getty Images with the request that each
Member informs Getty Investments in writing within 7 days whether it
wishes to purchase any of the Offered Stock. Each such Member shall
be entitled to accept (either itself or by nominating one or more
Permitted Transferees) such number of the Offered Stock as bears the
same proportion to the total Offered Stock as the number of shares of
Common Stock already held by such Member calculated as a percentage of
the total Common Stock held by all Members (other than those held by
the Vendor). Any balance of the Offered Stock not so accepted shall
be offered again to the remaining Members who wish to accept (either
themselves or through their nominating one or more Permitted
Transferees) Offered Stock on a similar basis.
5.4 For the purpose of clauses 5.4 to 5.6, the term "the Offer" relates to
any offer pursuant to clause 5.3 and the term "Stockholder" includes
any Person who accepts an offer pursuant to clause 5.3. If the Offer
is accepted in respect of all of the Offered Stock Getty Investments
shall forthwith give notice (the "ALLOCATION NOTICE") of the
<PAGE>
acceptance of the Offer to the Vendor and to each Stockholder. The
Allocation Notice shall specify:
5.4.1 the price of the Offered Stock (the "TRANSFER PRICE");
5.4.2 the number of shares of Offered Stock to be transferred to each
Stockholder to whom the Offered Stock has been allocated; and
5.4.3 the place and time (being not earlier than fourteen and not later than
twenty-eight days after the date of the Allocation Notice) at which
the Transfer Price is to be paid by the Stockholders and the Offered
Stock is to be transferred by the Vendor.
5.5 If the Members or their nominees do not accept the Offer to purchase
all of the Offered Stock in accordance with clauses 5.2 and 5.3, then
the following provisions shall apply:
5.5.1 Getty Investments shall notify that fact to the Vendor; and
5.5.2 the Vendor may either:
(a) withdraw the Transfer Notice and cancel Getty Investments'
authority to sell the Offered Stock by delivering to Getty
Investments a written notice of withdrawal but where applicable
may continue to sell the Offered Stock pursuant to the
Registration Rights Agreement; or
(b) may before the expiration of 30 days after receiving the
notification referred to in paragraph 5.5.1 elect by notice in
writing to Getty Investments to Transfer the Offered Stock which
Members or their nominees have accepted to such Members or their
Nominees in the amounts which they have respectively accepted and
with regard the remainder to the Purchaser at the Transfer Price
and otherwise on terms no more favourable than those offered to
the relevant Members and subject to the condition that the
Purchaser must enter into a deed with the Parties hereto agreeing
to discharge in full any outstanding obligations of the Vendor
towards the Parties hereto and otherwise in accordance with
clause 6.3; and
in all cases the Vendor shall be bound by the applicable provisions of
the Stockholders Agreement.
5.6 The Vendor shall be bound to Transfer such number of the shares of
Offered Stock as have been allocated pursuant to paragraph 5.4 above
against tender of the Transfer Price in accordance with the terms of
the Allocation Notice.
6. TRANSFERS - GENERAL
6.1 An obligation to Transfer an Common Stock pursuant to these provisions
shall be deemed to be an obligation to Transfer the entire legal and
beneficial interest in the
<PAGE>
Common Stock free from all liens, mortgages, charges, encumbrances and
other third party rights of whatever nature.
6.2 The Directors of Getty Images shall register the Transfer of Common
Stock to any Person only if the Transfer has been carried out in
accordance with this Agreement and the Stockholders' Agreement and in
no other circumstances.
6.3 The Parties shall procure that any Transfer or pledge or grant of any
option over Common Stock in accordance with this Agreement and, in the
case of Permitted Transferees, the Stockholders' Agreement shall be
subject to the following conditions which must be satisfied prior to
such Transfer, pledge or grant:
6.3.1 the Transferee, pledgee or grantee shall execute a deed confirming to
the other Parties that it shall be bound by this Agreement and, in the
case of Permitted Transferees, the Stockholders' Agreement in respect
of the Common Stock Transferred, pledged or granted as if it was a
Party; and
6.3.2 the Transferring, pledging or granting Party (which expression shall
include a second or subsequent Transferor, pledgee or grantee in a
series of Transfers, pledges or grants) shall be jointly and severally
liable with the Transferee for its obligations pursuant to this
Agreement and, in the case of Permitted Transferees, the Stockholders'
Agreement.
7. LOCK-UP - CREDITON
7.1 Subject to clause 7.2, in respect of the 50% of the number of shares
of Common Stock set opposite its name in Exhibit A hereto (the
"CREDITON LOCK-UP STOCK"), Crediton agrees not to Transfer (other than
to a Permitted Transferee in accordance with this Agreement) any of
the Crediton Lock-up Stock until 8 July 2001 and thereafter for a
further period of two years not to Transfer (other than to a Permitted
Transferee in accordance with this Agreement) more than 50% of the
Crediton Lock-up Stock.
7.2 The following exceptions to clause 7.1 are hereby agreed:
(a) if Jonathan D. Klein ceases to be employed by the Group then
Crediton will be released from its obligations in clause 7.1;
(b) if any Party other than the October Trust Transfers (other than
to a Permitted Transferee in accordance with this Agreement) any
Common Stock then Crediton will be released from its obligations
under clause 7.1 in respect of such Common Stock that is the same
percentage of all the Crediton Lock-up Stock (or after 8 July
2001 the same percentage as half the Crediton Lock-up Stock), as
the percentage that the Common Stock being sold is of all the
Common Stock held by the Parties other than Crediton and October
Trust; and
<PAGE>
(c) if the Common Stock held by the Parties (other than Crediton and
the October Trust) ceases to represent 7% or more of the total
Common Stock of Getty Images outstanding from time to time then
Crediton shall be released from its obligations under clause 7.1.
7.3 In consideration of the agreement set forth above:
(a) Getty Investments will pay to Crediton an annual fee according to
the Schedule provided in paragraph (b).
(b) The fees payable under paragraph (a) shall be as follows:
YEAR BEGINNING FEE AMOUNT
08/07/97 L267,500 multiplied by (1+2/3 RPI increase from
May 1996 to May 1997)
08/07/98 Fee payable at 08/07/97 multiplied by (1+2/3
RPI increase from May 1997 to May 1998)
08/07/99 Fee payable at 08/07/98 multiplied by
97,000/267,500 and further multiplied by (1+2/3
RPI increase from May 1998 to May 1999)
08/07/00 Fee payable at 08/07/99 multiplied by (1+2/3 RPI
increase from May 1999 to May 2000)
08/07/01 Fee payable at 08/07/00 multiplied by (1+2/3 RPI
increase from May 2000 to May 2001)
08/07/02 Fee payable at 08/07/01 multiplied by (1+2/3 RPI
increase from May 2001 to May 2002)
(c) Such annual fee will be payable in advance on 8 July of each
year.
8. LOCK-UP - OCTOBER TRUST
8.1 Subject to clause 8.2, in respect of 50% of the number of shares of
Common Stock set opposite its name in Exhibit A hereto (the "OCTOBER
LOCK-UP STOCK"), the October Trust agrees not to Transfer (other than
to a Permitted Transferee in accordance with this Agreement) any of
the October Lock-up Stock until 8 July 2001 and thereafter for a
further period of two years not to Transfer (other than to a Permitted
Transferee in accordance with this Agreement) more than 50% of the
October Lock-up Stock.
8.2 The following exceptions to clause 8.1 are hereby agreed:
<PAGE>
(a) if Mark H. Getty ceases to be employed by the Group then the
October Trust will be released from its obligations in clause
8.1;
(b) if any Party other than Crediton Transfers (other than to a
Permitted Transferee in accordance with this Agreement) any
Common Stock then the October Trust will be released from its
obligations under clause 8.1 in respect of the Common Stock that
is the same percentage of all the October Trust Lock-up Stock (or
after 8 July 2001 the same percentage as half the October Trust
Lock-up Stock) as the percentage that the Common Stock being sold
is of all the Common Stock held by the Parties other than
Crediton and October Trust; and
(c) if the Common Stock held by the Parties (other than Crediton and
the October 1993 Trust and their Permitted Transferees) ceases to
represent 7% or more of the total Common Stock of Getty Images
outstanding from time to time then the October Trust shall be
released from its obligations under clause 8.1
8.3 In consideration of the agreement set forth above:
(a) Getty Investments will pay to the October Trust an annual fee
according to the schedule provided in paragraph (b).
(b) The fees payable under paragraph (a) shall be as follows:
YEAR BEGINNING FEE AMOUNT
08/07/97 L77,500 multiplied by (1+2/3 RPI
increase from May 1996 to May 1997)
08/07/98 Fee payable at 08/07/97 multiplied by
(1+2/3 RPI increase from May 1997 to May
1998)
08/07/99 Fee payable at 08/07/98 multiplied by
28,000/77,500 and further multiplied by
(1+2/3 RPI increase from May 1998 to May
1999)
08/07/00 Fee payable at 08/07/99 multiplied by
(1+2/3 RPI increase from May 1999 to May
2000)
08/07/01 Fee payable at 08/07/00 multiplied by
(1+2/3 RPI increase from May 2000 to May
2001)
08/07/02 Fee payable at 08/07/01 multiplied by
(1+2/3 RPI increase from May 2001 to May
2002)
(c) such annual fee will be payable in advance on 8 July of each
year.
<PAGE>
9. SPECIAL LOCK-UP
9.1 Subject to paragraph 9.2, in respect of all and any shares of Common
Stock (the "LOCK-UP STOCK"), each of J.D. Klein, Crediton, M.H. Getty
and the October Trust (together the "COVENANTEES") hereto agree not to
Transfer (other than to a Permitted Transferee in accordance with this
Agreement any of the Lock-up Stock until the later of the announcement
by Getty Images of its results for the second quarter of 1998 and 9
August 1998.
9.2 clause 9.1 does not apply to the transfer of up to 60,000 shares of
Common Stock of Getty Images in aggregate by:
9.2.1 J.D. Klein and Crediton; or
9.2.2 M.H. Getty and the October Trust.
9.3 Each of the Covenantees hereby agrees with Getty Investments that in
the event of any proposed Transfer (other than to a Permitted
Transferee in accordance with this Agreement) it shall give Getty
Investments at least 10 days notice of such proposed Transfer and
shall consult with Getty Investments about the reasons for, manner of
and timing of such proposed Transfer.
10. STOCK CERTIFICATE LEGEND
All certificates representing shares of Common Stock shall bear, in
addition to other legends required under applicable securities laws,
the following legend:
"The shares represented by this certificate are subject to
the provisions of the Getty Parties Shareholders' Agreement
dated as of 9 February 1998 among certain stockholders of
Getty Images, Inc."
11. NON-COMPETITION
11.1 RESTRICTIONS ON COMPETITION BY GETTY INVESTMENTS
Getty Investments agrees that neither it nor any Affiliates in which
it has a controlling interest shall (i) own directly or indirectly
assets comprising a visual content business as described in the
Prospectus other than through its relationship with Getty Images or
(ii) acquire an equity interest in any Person if at the time of such
acquisition such Person directly or indirectly through one or more
Affiliates in which it has a controlling interest owns any visual
content business as described in the Prospectus.
11.2 Nothing contained in this clause 11 shall prohibit or otherwise
restrict the ownership or acquisition of 10% or less of the
outstanding equity of a Person that engages in the visual content
business directly or indirectly as described in the Prospectus.
<PAGE>
12. APPOINTMENT OF CHAIRMAN OF GETTY IMAGES
Getty Images hereby agrees that, subject to the terms of the
Stockholders' Agreement, it shall take all necessary steps to ensure
the appointment of any person nominated to be chairman of Getty Images
by Getty Investments pursuant to the by-laws of Getty Images provided
that for so long as either Mark Torrance or Mark Getty are co-chairman
of the board such right shall not be in effect.
13. TERM
This Agreement has a term of seven years from 8 July 1996 (the
"INITIAL TERM"), unless terminated earlier pursuant to clause 14.
14. TERMINATION
14.1 CESSATION OF OWNERSHIP
This Agreement shall be terminated with immediate effect in respect of
any Party when it and its Permitted Transferees cease to be Members of
Getty Images; or
14.2 REDUCTION IN HOLDING OF GETTY IMAGES
This Agreement shall be terminated with immediate effect if the Common
Stock held by the Parties ceases to represent beneficially fewer than
the greater of 3,000,000 shares of Common Stock and such number of
shares as is equal to 2% or less of the then outstanding shares of
Common Stock.
14.3 For the purposes of this clause 14, Getty Images shall include any
corporation into which Getty Images may merge into or consolidate with
and in such case the term Common Stock shall mean and include the
shares of stock of such successor entity exchanged for such Common
Stock.
15. CONSEQUENCES OF TERMINATION
15.1 Subject to clause 15.2, each Party's further rights and obligations
cease immediately on termination of this Agreement, but termination
does not affect a Party's accrued rights and obligations at the date
of termination.
15.2 Upon the occurrence of the termination of this Agreement pursuant to
clause 14.1 or 14.2 an event set out in clause 14 above, Getty
Investments shall pay to Crediton and October Trust respectively any
outstanding fees together with all fees payable by Getty Investments
in respect of the entire period of the Agreement.
16. FURTHER ASSURANCE
Each party shall at its own cost do and execute, or arrange for the
doing and executing of, each necessary act, document and thing
reasonably within its power to implement this Agreement.
<PAGE>
17. GENERAL
17.1 This Agreement and any document referred to in this Agreement and
other documents constitute the entire agreement, and supersede any
previous agreement, between the parties relating to the subject matter
of this Agreement.
17.2 A variation of this Agreement is valid only if it is in writing and
signed by or on behalf of each party.
17.3 The failure to exercise or delay in exercising a right or remedy
provided by this Agreement or by law does not constitute a waiver of
the right or remedy or a waiver of other rights or remedies. No
single or partial exercise of a right or remedy provided by this
Agreement or by law prevents further exercise of the right or remedy
or the exercise of another right or remedy.
17.4 No provision of this Agreement creates a partnership between the
parties or makes a party the agent of the other party for any purpose.
A party has no authority or power to bind, to contract in the name of,
or to create a liability for the other party in any way or for any
purpose.
18. RESTRICTIVE TRADE PRACTICES ACT
Any provision contained in this Agreement or in any arrangement of
which this Agreement forms part by virtue of which this Agreement or
such arrangement is subject to registration under the Restrictive
Trade Practices Acts 1976 and 1977 shall not come into effect until
the day following the date on which particulars of this Agreement and
of any such arrangement have been furnished to the Office of the
Director General of Fair Trading in accordance with the requirements
of such Acts.
19. SATISFACTION OF LEGAL REQUIREMENTS
Notwithstanding any other provision of this Agreement, no Stockholder
may Transfer any Common Stock unless it has complied with all
applicable legal requirements, including without limitation applicable
United States federal and state securities laws.
20. ASSIGNMENT
20.1 A Party may not assign or transfer or purport to assign or transfer a
right or obligation under this Agreement except to a Permitted
Transferee. Each Party is entering into this Agreement for its
benefit and not for the benefit of another Person.
21. NOTICES
21.1 A notice or other communication under or in connection with this
Agreement shall be in writing and may be delivered personally or sent
by first class post or by fax, as follows:
21.1.1 if to Getty Investments to:
<PAGE>
Address: 1325 Airmotive Way, Suite 262
Reno
Nevada 89502-3240
Fax: + 1 702 786 5414
Marked for the attention of Jan Moehl and Mark Jenness
21.1.2 If to the Investors to the address specified for such Person in
Exhibit A hereto with a copy to:
Address: Clifford Chance
200 Aldersgate Street
London EC1A 4JJ
Fax: + 44 171 956 0181
Marked for the attention of: Michael Francies
21.1.3 If to Getty Images to:
Address: 101 Bayham Street
London
NW1 0AG
England
Fax: + 44 171 267 6540
Marked for the attention of Jonathan Klein
or to another Person, address or fax number specified by a party by
written notice to the other.
21.2 In the absence of evidence of earlier receipt, a notice or other
communication is deemed given:
21.2.1 if delivered personally, when left at the address referred to in
clause 21.1
21.2.2 if sent by fax, one hour after its despatch.
22. GOVERNING LAW
22.1 This Agreement is governed exclusively by Delaware law.
22.2 Arbitration - To the fullest extent permitted by law, any controversy
or claim arising out of or relating to this Agreement, or the breach
thereof shall be settled by mandatory, final and binding arbitration
in New York City, New York, USA under the auspices and in accordance
with the rules, then obtaining, of the American Arbitration
Association to the extent not inconsistent with the Delaware Uniform
Arbitration Act, and judgment upon the award rendered may be entered
in any court having jurisdiction thereof. Reasonable fees, costs and
expenses, including legal fees,
<PAGE>
incurred by any Party in connection with such arbitration shall be
borne by Getty Investments. Nothing in this paragraph 22.2 shall
limit any right that any Party may otherwise have to seek (on its own
behalf or in the right of Getty Investments) to obtain preliminary
injunctive relief in order to preserve the status quo pending the
disposition of any such arbitration proceeding.
23. COUNTERPARTS
This Agreement may be executed in any number of counterparts each of
which when executed and delivered is an original, but all the
counterparts together constitute the same document.
24. POWER TO APPOINT, REMOVE AND REPLACE A DIRECTOR OF GETTY INVESTMENTS
24.1 Each of Crediton and the October Trust shall have the right to
nominate one Person who is willing so to act, as a director of Getty
Investments and to nominate for removal and replacement the Person so
nominated by each of them.
24.2 Any nomination pursuant to clause 24.1 shall be effected by notice to
Getty Investments signed by or on behalf of the nominator. The notice
shall be left at or sent by post or facsimile transmission to the
office or such other place designated by the board for the purpose.
The nomination shall take effect as of the deposit of the notice or
such later date (if any) specified in the notice. The first director
nominated by the October Trust shall be Mark H. Getty and the first
director nominated by Crediton shall be Jonathan D. Klein.
25. CHAIRMAN OF BOARD OF GETTY INVESTMENTS
25.1 The October Trust shall have the right to nominate, out of the
directors of Getty Investments from time to time, a Person who is
willing so to act, as Chairman of Getty Investments and to removal and
replacement of the Person that is nominated as Chairman by it. The
first person nominated Chairman by October Trust shall be Mark H.
Getty.
25.2 Any nomination as Chairman pursuant to clause 25.1 shall be effected
by notice to Getty Investments signed by or on its behalf. The notice
shall be left at or sent by post or facsimile transmission to the
office or such other place designated by the board for the purpose.
The nomination shall take effect immediately on deposit of the notice
or on such later date (if any) specified in any notice.
<PAGE>
EXECUTED by the parties as follows:
Signed by )
a duly authorised )
representative for and )
on behalf of )
Crediton Limited )
/s/ JH Connell - Director Signature
- ------------------------------
Signed by )
a duly authorised )
representative for and )
on behalf of )
Abacus (C.I.) Limited as the )
Trustees of The October )
1993 Trust )
/s/ Authorized Signatory Signature
- ------------------------------
<PAGE>
Signed by )
a duly authorised )
representative for and )
on behalf of )
Getty Investments L.L.C. )
/s/ Authorized Signatory Signature
- ------------------------------
Signed by )
a duly authorised )
representative for and )
on behalf of )
Getty Images, Inc. )
/s/ Authorized Signatory Signature
- ------------------------------
Signed by
MARK GETTY
/s/ Mark Getty Signature
- ------------------------------
Signed by
JONATHAN KLEIN
/s/ Jonathan Klein Signature
- ------------------------------
<PAGE>
EXHIBIT A
THE INVESTORS
NOTICE ADDRESS
NAME NOTICE ADDRESS NO. OF SHARES
CREDITON LIMITED 60 Circular Road 622,602 Common
Douglas Shares
Isle of Man
IM1 1SA
ABACUS (C.I.) LTD AS THE La Motte Chambers 622,602 Common Shares
TRUSTEE OF THE OCTOBER St Helier
1993 TRUST Jersey
JE1 1BJ
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of February 9, 1998 (this
"Agreement"), between Getty Images, Inc., a Delaware corporation (the
"Company"), and Getty Investments L.L.C., a Delaware limited liability
company ("Getty Investments").
WHEREAS, the Company, Getty Communications plc, a public limited
company organized under the laws of England and Wales ("Getty
Communications"), PhotoDisc, Inc., a Washington corporation ("PhotoDisc") and
Print Merger, Inc., a Washington corporation and a wholly owned subsidiary of
the Company ("Merger Sub"), are parties to the Merger Agreement (the "Merger
Agreement") dated as of September 15, 1997, pursuant to which and subject to
the terms and conditions contained therein, (i) the Company and Getty
Communications will enter into a scheme of arrangement in accordance with the
Companies Act of 1985 of Great Britain (the "Scheme of Arrangement") and (ii)
Merger Sub will be merged with PhotoDisc (the "Merger", and together with the
Scheme of Arrangement, the "Transactions");
WHEREAS, the Company and Getty Investments are parties to the
subscription letter (the "Subscription Agreement"), dated the date hereof,
from Getty Investments to the Company pursuant to which Getty Investments has
agreed to subcribe for, and the Company has agreed to issue to Getty
Investments, shares of common stock, par value $0.01 per share, of the
Company ("Company Common Stock"); and
WHEREAS, it is a condition to the consummation of the transactions
provided for in the Merger Agreement, including the Scheme of Arrangement and
the Merger, that the parties hereto enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties and conditions contained herein, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. As used in this Agreement, the following terms shall
have the following respective meanings:
"COMMISSION" shall mean the United States Securities and Exchange
Commission, or any other United States federal agency at the time
administering the Securities Act or the Exchange Act, as applicable,
whichever is the relevant statute.
<PAGE>
2
"HOLDERS' REPRESENTATIVE" shall mean Getty Investments or such
other Person or Persons designated by Getty Investments.
"EXCHANGE ACT" shall mean the United States Securities Exchange
Act of 1934, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be amended from time to
time.
"HOLDER" shall mean Getty Investments or any transferee or
assignee thereof to whom the rights under this Agreement are assigned in
accordance with the provisions of Section 2.11 hereof.
"PERSON" shall mean an individual, corporation, association,
partnership, limited liability company, trust, organization, group (as such
term is used in Rule 13d-5 under the Exchange Act), business, government or
political subdivision thereof, governmental agency or other entity.
"PROSPECTUS" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus
supplement with respect of the terms of the offering of any security of the
Company covered by such Registration Statement and all other amendments or
supplements to the prospectus, including post-effective amendments, and all
material incorporated, or deemed to be incorporated, by reference in such
prospectus.
"REGISTRABLE SECURITIES" shall mean any Company Common Stock
issued pursuant to the Scheme of Arrangement or the Subscription Agreement
or securities which may be issued or distributed in respect thereof by way
of stock dividend or stock split or other distribution, exchange,
recapitalization, or reclassification. For purposes of this Agreement, any
Registrable Securities shall cease to be Registrable Securities when (i) a
Registration Statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such Registration Statement, (ii)
such Registrable Securities are sold by a person in a transaction in which
the rights under the provisions of this Agreement are not assigned, or
(iii) such Registrable Securities shall have ceased to be outstanding.
"REGISTRATION STATEMENT" shall mean any registration statement
under the Securities Act filed by the Company, including the Prospectus
contained therein, any amendments and supplements to such registration
statement, including post-effective amendments, and all exhibits and all
material incorporated, or deemed to be incorporated, by reference in such
registration statement.
<PAGE>
3
"SECURITIES ACT" shall mean the United States Securities Act of
1933, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be amended from time to time.
"STOCKHOLDERS' AGREEMENT" shall mean the Stockholders' Agreement
dated the date hereof among the Company, Getty Investments L.L.C., Mark
Getty, Jonathan Klein, Crediton Limited, October 1993 Trust, PDI, L.L.C.,
Mark Torrance and Wade Torrance.
ARTICLE II
AGREEMENTS IN RESPECT OF THE REGISTRABLE SECURITIES
SECTION 2.01. DEMAND REGISTRATIONS. (a) Subject to the
limitations set forth below, the Holders' Representative on behalf of the
Holders of Registrable Securities shall have the right (a "Demand Right") to
require the Company to file a Registration Statement under the Securities Act
in respect of Registrable Securities held by Holders. If at the time that a
Demand Right is exercised by the Holders' Representative on behalf of
Holders, the Company is not eligible to use Form S-3, such Demand Right shall
be a "Long-Form Demand Right". If at the time that a Demand Right is
exercised by Initiating Holders, the Company is eligible to use Form S-3,
such Demand Right shall be a "Short-Form Demand Right". Together, the
Holders shall be entitled to exercise a Demand Right on up to five occasions.
Each Demand Right must be exercised in respect of at least 850,000
Registrable Securities (subject to equitable adjustment in the event of stock
splits, stock dividends and similar events). No Demand Right may be exercised
within one year after the date that the registration of Registrable
Securities pursuant to a prior exercise of a Demand Right was declared
effective.
(b) As promptly as practicable, but in no event later than 45 days
after the Company receives a written request from the Holders' Representative
demanding that the Company so register the number of Registrable Securities
specified in such request, the Company shall file with the Commission and
thereafter use its reasonable best efforts to cause to be declared effective
promptly a Registration Statement (a "Demand Registration") providing for the
registration of all Registrable Securities as the Holders' Representative
shall have demanded be registered on behalf of Holders.
(c) Anything in this Agreement to the contrary notwithstanding,
the Company shall be entitled to postpone and delay, for a reasonable period
of time (the "Blackout Period"), not to exceed 60 days after the exercise of
a Demand Right in the case of subsections (i) and (iii) below, the filing of
any Demand Registration if:
<PAGE>
4
(i) the Company will be filing, within 30 days after the
exercise of a Demand Right, a Registration Statement pertaining to a public
offering of Company Common Stock in which the Holders are entitled to join
pursuant to Section 2.02 hereof;
(ii) the Company is subject to an existing contractual obligation
to its underwriters not to engage in a public offering;
(iii) the Company shall determine that any such filing or the
offering of any Registrable Securities would
(A) in the good faith judgement of the Board of Directors
of the Company, impede, delay or otherwise interfere with any pending
or contemplated financing, acquisition, corporate reorganization or
other similar transaction involving the Company or its wholly owned
subsidiaries;
(B) based upon advice from the Company's investment banker
or financial advisor, adversely affect any pending or contemplated
offering or sale of any class of securities by the Company; or
(C) in the good faith judgement of the Board of Directors
of the Company, require disclosure of material nonpublic information
which, if disclosed at such time, would be materially harmful to the
interests of the Company and its stockholders;
PROVIDED, HOWEVER, that the Blackout Period shall terminate upon the
completion or abandonment of the relevant securities offering or sale, the
termination or expiration of the existing contractual obligation not to
engage in a public offering, the completion or abandonment of the relevant
financing, acquisition, corporate reorganization or other similar
transaction, such time as such Demand Registration shall no longer affect the
relevant pending or contemplated offering or sale of securities by the
Company, the public disclosure by the Company or public admission by the
Company of such material nonpublic information or such time as such material
nonpublic information shall be publicly disclosed not in breach of
confidentiality obligations, as the case may be. After the expiration of any
Blackout Period and without any further request from the Holders'
Representative on behalf of Holders, the Company shall effect the filing of
the relevant Demand Registration and shall use its reasonable best efforts to
cause any such Demand Registration to be declared effective as promptly as
practicable unless the Holders' Representative shall have, prior to the
effective date of such Demand Registration, withdrawn in writing the initial
request, in which case such withdrawn request shall not constitute a Demand
Registration for purposes of determining the number of Demand Registrations
to which the Holders are entitled hereunder. The Company
<PAGE>
5
may not exercise its right to postpone or delay the filing of any Demand
Registration pursuant to this subsection (c) more than twice during any 12
month period.
(d) Any request by the Holders' Representative on behalf of
Holders for a Demand Registration which is subsequently withdrawn prior to
such Demand Registration becoming effective shall not constitute a Demand
Registration for purposes of determining the number of Demand Registrations
to which the Holders are entitled if such withdrawal (i) is due to a material
adverse change affecting the Company, (ii) is due to a notification by the
Company of an intention to file a Registration Statement with respect to
Company Common Stock or (iii) is made in accordance with the penultimate
sentence of Section 2.01(c).
(e) The Company shall be entitled to include authorized but
unissued shares of Company Common Stock in any Demand Registration, subject
to Section 2.02. Notwithstanding anything contained herein, if the lead
underwriter of an offering involving a Demand Registration delivers a written
opinion to the Holders' Representative (a copy of which shall be provided to
the Company) that the number of shares of Company Common Stock included in
such Demand Registration would (i) materially and adversely affect the price
of the Company Common Stock to be offered or (ii) result in a greater amount
of Company Common Stock being offered than the market could reasonably
absorb, then the number of Registrable Securities to be registered by the
Company and the number of shares of Company Common Stock to be included in
such Demand Registration by other holders of shares of Company Common Stock
pursuant to contractual incidental registration rights, shall be reduced in
proportion to the number of securities originally requested to be registered
by each of them to the extent that, in the lead underwriter's opinion,
neither of the effects in the foregoing clauses (i) and (ii) would result
from the number of shares of Company Common Stock included in such Demand
Registration.
SECTION 2.02. INCIDENTAL REGISTRATION. (a) If, at any time
following the Effective Time, the Company proposes to file a Registration
Statement under the Securities Act with respect to an offering of Company
Common Stock (i) for its own account (other than a Registration Statement on
Form S-4 or S-8 (or any substitute form that may be adopted by the
Commission)) or (ii) for the account of any holders of Company Common Stock
(including any pursuant to a Demand Registration), the Company shall give
written notice of such proposed filing to each Holder as soon as practicable
(but in any event not less than 30 days before the anticipated filing date),
and such notice shall offer each Holder the opportunity to register such
number of Registrable Securities as the Holder shall request. Upon the
written direction of any Holder, given within 20 days following the receipt
by such Holder of any such written notice (which direction shall specify the
number of Registrable Securities intended to be disposed of by such Holder),
the Company shall include in such Registration Statement (an "Incidental
Registration" and, collectively with a Demand Registration, a "Registration")
such number of Registrable Securities as shall be set forth in such written
direction. Notwithstanding anything
<PAGE>
6
contained herein, if the lead underwriter of an offering involving an
Incidental Registration delivers a written opinion to the Company (a copy of
which shall be provided to the Holders) that the number of shares of Company
Common Stock included in such Registration would (i) materially and adversely
affect the price of the Company Common Stock to be offered or (ii) result in
a greater amount of Company Common Stock being offered than the market could
reasonably absorb, then the number of Registrable Securities to be registered
by each party requesting Incidental Registration rights hereunder, and the
number of shares of Company Common Stock to be included in such Registration
by other holders of shares of Company Common Stock pursuant to contractual
incidental registration rights, shall be reduced in proportion to the number
of securities originally requested to be registered by each of them to the
extent that, in the lead underwriter's opinion, neither of the effects in the
foregoing clauses (i) and (ii) would result from the number of shares of
Company Common Stock included in such Registration. Nothing contained herein
shall require the Company to reduce the number of shares of Company Common
Stock proposed to be issued by the Company in a Registration initiated by the
Company with respect to an offering of Company Common Stock for its own
account.
(b) No Incidental Registration effected under this Section 2.02
shall be deemed to have been effected pursuant to Section 2.01 hereof or
shall release the Company of its obligations to effect any Demand
Registration upon request as provided under Section 2.01 hereof.
SECTION 2.03. REGISTRATION PROCEDURES. (a) In connection with
each Registration, and in accordance with the intended method or methods of
distribution of the Company Common Stock as described in such Registration,
the Company shall, as soon as reasonably practicable (and, in any event,
subject to the terms of this Agreement, including, without limitation,
Section 2.01(a) hereof, at or before the time required by applicable laws and
regulations):
(i) prepare and file with the Commission a Registration Statement
with respect to such Registrable Securities, which, if the method of
distribution is by means of an underwriting, shall be in form and substance
reasonably acceptable to the underwriters for such underwriting, and use
its reasonable best efforts to cause such Registration Statement to become
and remain effective for the period of the distribution contemplated
thereby; PROVIDED, HOWEVER, that the Company shall use its reasonable best
efforts to cause a Registration Statement on Form S-3 to remain effective
until the earlier of (i) the disposition of all the Registrable Securities
registered thereunder, and (ii) the expiration of the 90-day period
commencing on the first day of the effectiveness of such Registration;
<PAGE>
7
(ii) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement;
(iii) furnish to the Holder such numbers of copies of the
Registration Statement and the Prospectus included therein (including each
preliminary prospectus and any amendments or supplements thereto), in
conformity with the requirements of the Securities Act and such other
documents and information as it may reasonably request;
(iv) (A) make available for inspection by the Holder and its counsel
and financial advisors such financial and other information as shall be
reasonably requested by them, and provide such Holder and its counsel and
financial advisors the opportunity to discuss the business affairs of the
Company with its principal executives and accountants, for the purposes of
enabling the Holder to exercise its due diligence responsibilities under
the Securities Act and (B) before the Registration Statement (and any
amendments or supplements thereto) is filed, provide copies thereof to the
Holder and its counsel and provide them with adequate time to review and
comment thereon;
(v) use its reasonable best efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
other securities or blue sky laws of such jurisdiction within the United
States and Puerto Rico as shall be reasonably appropriate for the
distribution of the Registrable Securities covered by the Registration
Statement; PROVIDED, HOWEVER, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business in
or to file a general consent to service of process in any jurisdiction
wherein it would not but for the requirements of this paragraph (v) be
obligated to do so; and PROVIDED, FURTHER, that the Company shall not be
required to qualify such Registrable Securities in any jurisdiction in
which the securities regulatory authority requires that the Holder submit
any of its Registrable Securities to the terms, provisions and restrictions
of any escrow, lockup or similar agreement(s) for consent to sell
Registrable Securities in such jurisdiction unless such Holder agrees to do
so;
(vi) promptly notify each Holder, at any time when a Prospectus
relating to the Registrable Securities is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
Prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made, and at the request of any such Holder promptly prepare and
furnish to such
<PAGE>
8
Holder a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
Prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances under which they were made;
(vii) furnish, at the request of any Holder requesting
Registration of Registrable Securities pursuant to Sections 2.01 or 2.02
hereof, if the method of distribution is by means of an underwriting, on
the date that the Registrable Securities are delivered to the underwriters
for sale pursuant to such registration, or if such Registrable Securities
are not being sold through underwriters, on the date that the Registration
Statement with respect to such Registrable Securities becomes effective,
(1) a signed opinion, dated such date, of the independent legal counsel
representing the Company for the purpose of such registration, addressed to
the underwriters, if any, and if such Registrable Securities are not being
sold through underwriters, then to the Holders making such request, as to
such matters as such underwriters or the Holders holding a majority of the
Registrable Securities included in such Registration, as the case may be,
may reasonably request and as would be customary in such a transaction; and
(2) letters dated such date and the date the offering is priced from the
independent certified public accountants of the Company, addressed to the
underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holders making such request and, if such
accountants refuse to deliver such letters to such Holders, then to the
Company (A) stating that they are independent certified public accountants
within the meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements and other financial data of the
Company included in the Registration Statement or the Prospectus, or any
amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and
(B) covering such other financial matters (including information as to the
period ending not more than five (5) business days prior to the date of
such letters) with respect to the Registration in respect of which such
letter is being given as such underwriters or the Holders holding a
majority of the Registrable Securities included in such Registration, as
the case may be, may reasonably request and as would be customary in such a
transaction;
(viii) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable
Securities to be so included in the Registration Statement;
<PAGE>
9
(ix) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, but not later than
eighteen (18) months after the effective date of the Registration
Statement, an earnings statement covering the period of at least
twelve (12) months beginning with the first full month after the effective
date of such Registration Statement, which earnings statements shall
satisfy the provisions of Section 11(a) of the Securities Act; and
(x) use its reasonable best efforts to list the Company Common Stock
covered by such Registration Statement with any securities exchange or
recognized trading market on which the Company Common Stock are then
listed.
(b) Each Holder requesting Registration shall furnish to the Company
in writing such information regarding such Holder and its intended method of
distribution of the Registrable Securities as the Company may from time to time
reasonably request in writing, but only to the extent that such information is
required in order for the Company to comply with its obligations under all
applicable securities and other laws and to ensure that the Prospectus relating
to such Registrable Securities conforms to the applicable requirements of the
Securities Act and the rules and regulations thereunder. Such Holder shall
notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such Holder to the Company or of the
occurrence of any event, in either case as a result of which any Prospectus
relating to the Registrable Securities contains or would contain an untrue
statement of a material fact regarding such Holder or its intended method of
distribution of such Registrable Securities or omits to state any material fact
regarding such Holder or its intended method of distribution of such Registrable
Securities required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and promptly furnish to the Company any additional information
required to correct and update any previously furnished information, or required
so that such prospectus shall not contain, with respect to such Holder or the
intended method of distribution of the Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 2.04. REGISTRATION EXPENSES. All expenses incurred in
connection with each Registration pursuant to Sections 2.01 and 2.02 of this
Agreement, excluding underwriters' discounts and commissions and any stamp or
transfer tax or duty, but including without limitation all registration, filing
and qualification fees, word processing, duplicating, printers' and accounting
fees (including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance), fees of the
National Association of Securities Dealers, Inc. or listing fees, messenger and
delivery expenses, all fees and expenses of complying with state securities or
blue sky laws, fees and disbursements
<PAGE>
10
of one counsel for the Holders (selected by the Holders) and fees and
disbursements of counsel for the Company incurred in connection with each
registration shall be paid by the Company; PROVIDED, HOWEVER, that if a
registration request pursuant to Section 2.01 of this Agreement is
subsequently withdrawn at the request of the Holders' Representative on
behalf of Holders of a number of shares of Registrable Securities such that
the remaining Holders requesting registration would not have been able to
request registration under the provisions of Section 2.01 of this Agreement
and the provisions of Section 2.01(d) do not apply, such withdrawing Holders
shall bear such expenses (in proportion to the number of shares orginally
included in such Registration by such Holders) and the Company shall not be
required to pay any of such expenses, unless the Holders shall forfeit their
right to one requested registration pursuant to Section 2.01 of this
Agreement. Each Holder shall bear and pay the underwriting commissions and
discounts and any stamp or transfer tax or duty and the fees and
disbursements of counsel for the Holders other than the one counsel referred
to above incurred in connection with each Registration applicable to
securities offered for its account in connection with any Registrations,
filings and qualifications made pursuant to this Agreement.
SECTION 2.05. UNDERWRITING REQUIREMENTS. In connection with any
underwritten offering, the Company shall not be required under Section 2.02 of
this Agreement to include shares of Registrable Securities in such underwritten
offering unless the Holders of such shares of Registrable Securities accept the
terms of the underwriting of such offering that have been reasonably agreed upon
between the Company and the underwriters selected by the Company.
SECTION 2.06. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, and it hereby
agrees to, indemnify and hold harmless each Holder, such Holder's directors,
officers, partners, managers, members and trustees and each Person who
participates as a placement or sales agent or as an underwriter (within the
meaning of the Securities Act) in any offering or sale of the Registered
Securities, against any losses, claims, damages or liabilities ("Losses") to
which such Holder, such Holder's directors, officers, partners, managers,
members and trustees or such agent or underwriter may become subject, insofar as
such Losses (or actions, proceedings or investigations in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus contained
therein or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Company shall, and it hereby
agrees to, reimburse each such Holder, such Holder's directors, officers,
partners, managers, members and trustees or any such agent or underwriter for
any legal or other out-of-pocket expenses reasonably incurred by them (but not
in excess of expenses incurred in respect of one counsel for all of them unless
there is an actual conflict of interest between any indemnified parties, which
<PAGE>
11
indemnified parties may be represented by separate counsel) in connection
with investigating or defending any such action, proceeding or investigation;
PROVIDED, HOWEVER, that the indemnity agreement contained in this Section
2.06(a) shall not apply to amounts paid in settlement of any such Loss,
action, proceeding or investigation if such settlement is effected without
the consent of the Company which consent shall not be unreasonably withheld;
PROVIDED, FURTHER, that the Company shall not be liable to any such Person in
any such case to the extent that any such Loss or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or Prospectus contained
therein, in reliance upon and in conformity with written information
furnished to the Company by such Holder or any agent, underwriter or
representative of such Holder expressly for use therein, or by such Holder's
failure to furnish the Company, upon request, with the information with
respect to such Holder, such Holder's directors, officers, partners,
managers, members and trustees, or any agent, underwriter or representative
of such Holder, or such Holder's intended method of distribution, that is the
subject of the untrue statement or omission or, in the case of such agent or
underwriter, if the Company shall sustain the burden of proving that such
agent or underwriter sold securities to the person alleging such Loss without
sending or giving, at or prior to the written confirmation of such sale, a
copy of the applicable Prospectus (excluding any documents incorporated by
reference therein) or of the applicable Prospectus, as then amended or
supplemented (excluding any documents incorporated by reference therein) if
the Company had previously furnished copies thereof to such agent or
underwriter, and such Prospectus corrected such untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration.
(b) INDEMNIFICATION BY THE HOLDERS AND ANY AGENT OR UNDERWRITERS.
Each Holder requesting or joining in a Registration shall severally and not
jointly indemnify and hold harmless the Company, each of its directors and
officers, each Person, if any, who controls the Company within the meaning of
the Securities Act, and each agent and any underwriter for the Company (within
the meaning of the Securities Act) against any Losses, joint or several, to
which the Company or any such director, officer, controlling Person, agent or
underwriter may become subject, under the Securities Act or otherwise, insofar
as such Losses (or actions, proceedings or investigations in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such Registration Statement on the effective
date thereof (including any Prospectus filed under Rule 424 under the Securities
Act or any amendments or supplements thereto) or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
Registration Statement or Prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished by or on
behalf of such Holder expressly for use in connection with such Registration
Statement or Prospectus, or by such Holder's failure to furnish the Company,
<PAGE>
12
upon request, with the information with respect to such Holder, such Holder's
directors, officers, partners, managers, members and trustees or any agent,
underwriter or representative of such Holder, or such Holder's intended method
of distribution, that is the subject of the untrue statement or omission; and
each such Holder shall reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person, agent or
underwriter (but not in excess of expenses incurred in respect of one counsel
for all of them unless there is an actual conflict of interest between any
indemnified parties, which indemnified parties may be represented by separate
counsel) in connection with investigating or defending any such Loss or action,
proceeding or investigation; PROVIDED, HOWEVER, that the indemnity agreement
contained in this Section 2.06(b) shall not apply to amounts paid in settlement
of any such Loss, action, proceeding or investigation if such settlement is
effected without the consent of such Holder which consent shall not be
unreasonably withheld and in no event shall a Holder be liable under this
Section 2.06(b) for an amount in excess of the gross proceeds received by such
Holder from the sale of securities pursuant to such Registration.
(c) NOTICE OF CLAIMS, ETC. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the commencement of
any action or proceeding for which indemnification under subsection (a) or (b)
may be requested, such indemnified party shall, without regard to whether a
claim in respect thereof is to be made against an indemnifying party pursuant to
the indemnification provisions of, or as contemplated by, this Section 2.06,
notify such indemnifying party in writing of the commencement of such action or
proceeding; but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party in
respect of such action or proceeding on account of the indemnification
provisions of or contemplated by Section 2.06(a) or 2.06(b) hereof unless the
indemnifying party was materially prejudiced by such failure of the indemnified
party to give such notice, and in no event shall such omission relieve the
indemnifying party from any other liability it may have to such indemnified
party. In case any such action or proceeding shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, such indemnifying party shall be entitled to participate therein and,
to the extent that it shall determine, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, such indemnifying party shall not be liable to such indemnified party
for any legal or any other expenses subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation (unless such indemnified party reasonably objects to such
assumption on the grounds that there may be defenses available to it which are
different from or in addition to the defenses available to such indemnifying
party, in which event the indemnified party shall have the right to control its
defense and shall be reimbursed by the indemnifying party for the expenses
incurred in connection with retaining separate counsel). If the indemnifying
party is
<PAGE>
13
not entitled to, or elects not to, assume the defense of a claim, it
will not be obligated to pay the fees and expenses of more than one counsel (in
addition to local counsel) for each indemnified party with respect to such
claim. The indemnifying party will not be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld or delayed. No indemnifying party will consent to entry of any
judgment or enter into any settlement agreement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) CONTRIBUTION. Each Holder requesting or joining in a
Registration and the Company agree that if, for any reason, the
indemnification provisions contemplated by Section 2.06(a) or Section 2.06(b)
hereof are unavailable to or are insufficient to hold harmless an indemnified
party in respect of any Losses (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such Losses
(or actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative fault of, and benefits derived by, the
indemnifying party and the indemnified party, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied
by such indemnifying party or by such indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 2.06(d)
were determined (i) by pro rata allocation (even if the Holder or any agents
for, or underwriters of, the Registrable Securities, or all of them, were
treated as one entity for such purpose); or (ii) by any other method of
allocation which does not take account of the equitable considerations
referred to in this Section 2.06(d). The amount paid or payable by an
indemnified party as a result of the Losses (or actions or proceedings in
respect thereof) referred to above shall be deemed to include (subject to the
limitations set forth in Section 2.06(c) hereof) any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(e) BENEFICIARIES OF INDEMNIFICATION. The obligations of the Company
under this Section 2.06 shall be in addition to any liability that it may
otherwise have and shall extend, upon the same terms and conditions, to each
officer, director, partner, manager, member and trustee of each Holder
requesting or joining in a Registration and each agent and underwriter of the
Registrable Securities and each person, if any, who controls such Holder or any
such agent or underwriter within the meaning of the Securities Act; and the
obligations of
<PAGE>
14
such Holder and any agents or underwriters contemplated by this
Section 2.06 shall be in addition to any liability that such Holder or its
respective agent or underwriter may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his consent, is named in any Registration
Statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Securities Act.
SECTION 2.07. TERMINATION OF REGISTRATION RIGHTS. Notwithstanding
any other provisions of this Agreement to the contrary, the registration rights
granted pursuant to this Agreement shall terminate with respect to a Holder on
the earlier of: (i) the date that the Registrable Securities held by such Holder
can be sold within a three month period under the volume limitation of Rule
144(e) under the Securities Act (or other similar rule), regardless of whether
at the time of such sales the Holder is entitled to rely upon paragraph (k) of
Rule 144; or (ii) on the 15th anniversary of the date of this Agreement,
regardless of the tradeability of any Registrable Securities held by such
Holder.
SECTION 2.08. UNDERWRITERS. If any of the Registrable Securities are
to be sold pursuant to an underwritten offering, the investment banker or
bankers and the managing underwriter or underwriters thereof shall be selected
by the Company after consultation with the Holders participating in such
Registration, PROVIDED, that such managing underwriter or underwriters must be
of recognized international standing.
SECTION 2.09. LOCKUP. Each Holder shall, in connection with any
Registration of the Company's securities, upon the request of the underwriters
managing any underwritten offering of the Company's securities, agree in writing
not to effect any sale, disposition or distribution of any Registrable
Securities (other than that included in the Registration or, if the
effectiveness of such Registration is after two years after the date of this
Agreement and such Registration has not been initiated by the exercise of demand
registration rights by a stockholder party to the Stockholders' Agreement, sales
in accordance with Rule 144 under the Securities Act and within the volume
limitation of Rule 144(e) under the Securities Act, regardless of whether at the
time of such sales the Holder is entitled to rely upon paragraph (k) of Rule
144]) without the prior written consent of the Company or such underwriters, as
the case may be, for such period of time not to exceed one hundred and eighty
(180) days from the effective date of such Registration as the underwriters may
specify; PROVIDED, HOWEVER, that all executive officers and directors of the
Company shall also have agreed not to effect any sale, disposition or
distribution of any Registrable Securities under the circumstances and pursuant
to the terms set forth in this Section 2.09.
SECTION 2.10. LEGENDS. (a) Stop transfer restrictions will be given
to the Company's transfer agent(s) with respect to the Registrable Securities
and there will be placed
<PAGE>
15
on the certificate or instruments representing the Registrable Securities,
and on any certificate or instrument delivered in substitution or exchange
therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO SUCH REGISTRATION OR IN ACCORDANCE WITH
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(b) The Company hereby agrees that it will cause stop transfer
restrictions to be released with respect to any Registrable Securities that are
transferred (i) pursuant to an effective Registration Statement under the
Securities Act, (ii) pursuant to Rule 144 under the Securities Act, or
(iii) pursuant to another exemption from the registration requirements of the
Securities Act; PROVIDED, HOWEVER, that in the case of any transfer pursuant to
clause (ii) or (iii) above, the request for transfer is accompanied by a written
statement signed by the Holder confirming compliance with the requirements of
the relevant exemption from registration; and PROVIDED, FURTHER, that in the
case of any transfer pursuant to clause (iii) above, other than any transfer by
the Holder to one or more of its direct or indirect subsidiaries, or among such
subsidiaries, or by any such subsidiary to the Holder, the Company shall have
received a written opinion of counsel reasonably satisfactory to the Company
that such registration is not required. The Company further agrees that it will
cause the legend described in subsection (a) of this Section 2.10 to be removed
in the event of any transfer as provided in clause (i) or (ii) above.
SECTION 2.11. TRANSFER OF REGISTRATION RIGHTS. The Holders may not
transfer their rights under this Agreement without the written consent of the
Company; PROVIDED, HOWEVER, that a Holder may transfer such Holder's rights
without the Company's consent to a Permitted Transferee (as defined below) if
(i) the transferring Holder gives the Company written notice, whether or not the
Company's consent is necessary to effect such transfer, at or prior to the time
of such transfer stating the name and address of the transferee and identifying
the securities with respect to which the rights under this Agreement are being
transferred and (ii) such transferee agrees in writing, in form and substance
reasonably satisfactory to the Company, to be bound as a Holder by the
provisions of this Agreement. Any transfer of Registrable Securities not in
compliance with this Section 2.11 shall cause such Registrable Securities to
lose such status. For purposes of this Section 2.11, "Permitted Transferee"
shall mean (i) in the case of any Holder who is a natural person, a Person to
whom Registrable Securities are transferred from such Holder by gift, will or
the laws of descent and distribution, (ii) any member of the Getty Group or the
Torrance Group (each as defined in the Stockholders' Agreement, as amended from
time to time), and (iii) any "affiliate" of any
<PAGE>
16
Holder, including, without limitation, any trust, partnership or limited
liability company that a Holder controls or is a beneficiary of, or any
Person that is a member of any Holder or a beneficiary of any such trust, and
any partnership or limited liability company controlled by two or more of
such trusts or beneficiaries of such trust or trusts.
SECTION 2.12. PUBLIC INFORMATION. The Company covenants to make
available "adequate current public information" concerning the Company within
the meaning of Rule 144(c) under the Securities Act.
SECTION 2.13. MERGERS AND CONSOLIDATIONS. The Company shall not,
directly or indirectly, enter into any merger, consolidation or reorganization
in which the Company shall not be the surviving corporation, or transfer all or
substantially all of its assets, unless prior to such merger, consolidation,
reorganization or transfer, the surviving corporation or transferee shall have
agreed in writing to assume the obligations of the Company under this Agreement
and for that purpose references to Registrable Securities shall mean the
securities issued in exchange for such Registrable Securities pursuant to such
merger, consolidation, reorganization or sale.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. EXPENSES. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 3.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given and made upon receipt) by delivery
in person, by courier service, by cable, by facsimile, by telegram, by telex, or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
3.02):
(a) if to the Company:
Getty Images, Inc.
500 North Michigan Avenue, Suite 1700
Chicago, Illinois 60611
Facsimile: (1312) 922-9075
<PAGE>
17
Attention: Andrew Duncomb
with copies to:
Clifford Chance
200 Aldersgate
London EC1A 4JJ
Facsimile: (44171) 600-5555
Attention: Michael Francies
Shearman & Sterling
555 California Street
San Francisco, California 94104
Facsimile: (415) 616-1199
Attention: Christopher D. Dillon
(b) if to Getty Investments:
Getty Investments L.L.C.
1325 Airmotive Way, Suite 262
Reno, Nevada 89502
Facsimile: (702) 786-5414
Attention: Jan D. Moehl
Mark J. Jenness
SECTION 3.03. PUBLIC ANNOUNCEMENTS. No party to this Agreement
shall make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the other
party (except to the extent that such disclosure is required by law or the rules
of the Nasdaq National Market), and, to the extent practicable, the parties
shall cooperate as to the timing and contents of any such press release or
public announcement.
SECTION 3.04. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 3.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
<PAGE>
18
other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
SECTION 3.06. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties hereto with respect to the subject matter hereof, except as
otherwise expressly provided herein.
SECTION 3.07. ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns; PROVIDED, HOWEVER, that this Agreement shall
not inure to the benefit of any transferee unless such transferee shall have
complied with the terms of Section 2.11. Except with the consent of the
Company, no Holder may assign any of its rights hereunder to any Person other
than a transferee that has complied with the requirements of Section 2.11 in all
respects.
SECTION 3.08. NO THIRD PARTY BENEFICIARY. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective successors and permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 3.09. AMENDMENT. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Company and Holders of a majority of the Registrable Securities then held by all
Holders or (b) by a waiver in accordance with Section 3.10 of this Agreement.
SECTION 3.10. WAIVER. Any party to this Agreement may (a) extend the
time for the performance of any obligations or other acts of any other party
hereto or (b) waive compliance with any agreements or conditions contained
herein. Any such extension or waiver shall be valid against the Company only if
set forth in an instrument in writing signed by the Company and shall be valid
against the Holders only if set forth in an instrument in writing signed by
Holders of a majority of the Registrable Securities then held by all Holders.
Any waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or as a
waiver of any other term or condition, of this Agreement. The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.
SECTION 3.11. GOVERNING LAW; DISPUTE RESOLUTION. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to
<PAGE>
19
contracts executed in and to be performed entirely within
that State. All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined in any Delaware state or federal court
sitting in the State of Delaware. In the event of any dispute, claim or
litigation with regard to this Agreement, the prevailing party shall be entitled
to receive from the non-prevailing party, and the non-prevailing party shall
promptly pay, all reasonable fees and expenses of counsel for the prevailing
party incurred in connection with such dispute, claim or litigation.
SECTION 3.12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
SECTION 3.13. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 3.14. SURVIVAL. The several indemnities, agreements,
representations, warranties and each other provision set forth in this Agreement
and made pursuant hereto shall remain in full force and effect regardless of any
investigation (or statement as to the results thereof) made by or on behalf of
any party, any director or officer of such party, or any controlling person of
any of the foregoing, and shall survive the transfer of any Registrable
Securities by a Holder, and the indemnification and contribution provisions set
forth in Section 2.06 hereof shall survive termination of this Agreement.
SECTION 3.15. TERMINATION OF EXISTING REGISTRATION RIGHTS AGREEMENT.
The Registration Rights Agreement dated as of July 3, 1996 between Getty
Communications plc and Getty Investments is hereby terminated.
SECTION 3.16. THE HOLDERS' REPRESENTATIVE. The Holder hereby
appoints the Holders' Representative as its attorney-in-fact to act on its
behalf and to take any and all actions required or permitted to be taken by the
Holders' Representative under this Agreement. The Company shall be entitled to
rely, as being binding upon the Holder, upon any document or other paper
believed by it to be genuine and correct and to have been signed or sent by the
Holders' Representative, and the Company shall not be liable to any Holder for
any action taken or omitted to be taken by it in such reliance.
<PAGE>
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized or in their individual capacities, as applicable.
GETTY IMAGES, INC.
By: /s/ Mark Getty
---------------------------------------------
Name: Mark Getty
Title: Director
GETTY INVESTMENTS L.L.C
By: /s/ Jan D. Moehl
---------------------------------------------
Name: Jan D. Moehl
Title: Officer
<PAGE>
RESTATED OPTION AGREEMENT
THE AGREEMENT, made as of the 9th day of February 1998 by and between:
(1) GETTY INVESTMENTS LLC, a limited liability company organised and
existing under the laws of the State of Delaware, United States of
America, with its principal office at 1325 Airmotive Way, Suite 262,
Reno, Nevada 89502, USA (hereinafter "GETTY INVESTMENTS");
(2) GETTY IMAGES, INC., a company incorporated and existing under the laws
of Delaware, with its principal office at 500 North Michigan Avenue,
Suite 1700, Chicago, Illinois 60611, USA, (hereinafter "GETTY IMAGES");
and
(3) GETTY COMMUNICATIONS PLC, a company incorporated under the laws of
England and Wales (registered number 3005770), with its registered
office at 101 Bayham Street, Camden Town, London NW1 0AG, England
(hereinafter "GETTY COMMUNICATIONS").
WITNESSETH:
WHEREAS Getty Investments owns a significant interest in Getty Images;
WHEREAS ownership of Getty Investments resides in membership interests held by
trusts and other entities whose beneficial owners and beneficiaries are members
of the Getty family;
WHEREAS said members of the Getty family have consented to the use and
registration of the "Getty" name as a trade name, trademark and service mark by
Getty Images and the companies under its control and Getty Investments hereby
agrees to provide to the extent it is able to any written consent required to
achieve registration, where the rights or trade marks of the Getty family and
related companies are cited as obstacles in the prosecution of "Getty" Marks of
Getty Images;
WHEREAS Getty Images and its subsidiaries use or intend to use the trade names,
trademarks and service marks "Getty" and derivations thereof, including without
limitation the trade names, trade marks and service marks set forth in Schedule
A (hereinafter collectively the "GETTY MARKS" which term shall include any
future trade names, trademarks and service marks incorporating "Getty" and the
aforementioned design) for photograph library, stock film and video agency
services, and related goods and services;
WHEREAS Getty Communications and its subsidiaries have applied for registration
of the Getty Marks in the United States, the United Kingdom, and the European
Union and any other jurisdiction; and
WHEREAS Getty Investments wishes to retain control over the Getty Marks in the
event that a third party acquires a Controlling Interest (as hereinafter
defined) of Getty Images,
NOW THEREFORE, in consideration of the mutual promises and covenants herein set
forth, the parties do hereby agree as follows:
<PAGE>
1. GRANT OF OPTION
Subject to the terms and conditions set forth below, and for
consideration of $1 (the receipt and adequacy of which are hereby
acknowledged) Getty Images grants to Getty Investments the right and
option to purchase all right, title and interest in and to the Getty
Marks, together with the goodwill of the business symbolised by the
marks, and all applications and registrations for said marks, for the
sum of $100. Getty Images shall not sell, transfer or encumber the
Getty Marks, or any interest therein, without the prior written consent
of Getty Investments.
2. EXERCISE OF OPTION
(a) Getty Investments shall have the right to exercise said option at
any time in the future, but only after a third party (or related
third party group) shall obtain a Controlling Interest in Getty
Images. For the purposes hereof, the phrase "Controlling
Interest" shall mean the ability to cast a majority of the total
votes capable of being cast at any meeting of the holders of
shares in Getty Images. Getty Investments shall have thirty (30)
days after being notified in writing that any such third party
has obtained a Controlling Interest in Getty Images in which to
exercise this option by mailing, by certified mail, return
receipt requested, a written notice of its exercise to Getty
Images together with the payment of $100.
(b) Within thirty (30) days of the receipt of said notice and payment
Getty Images and Getty Communications shall execute and deliver
to Getty Investments an assignment of all right, title and
interest in and to the Getty Marks and all applications and
registrations for said marks. Said assignment shall be in a form
suitable for recordal with the appropriate governmental agencies
of the United States, the United Kingdom and the European Union
and any other jurisdiction in which the Getty Marks are
registered or in which there are applications for registration
pending. In the event that the assignments supplied are not in a
form suitable for recordal with the appropriate governmental
agencies or further documentation is required, Getty Images and
Getty Communications undertake to execute any such further
documents reasonably required by Getty Investments to effect
final recordal of assignment.
3. PHASE-OUT PERIOD AND LICENSE
(a) Getty Images shall have one year from the date of the notice
referred to in Clause 2(b) above, to phase out all use by Getty
Images and its subsidiaries of all the Getty Marks (hereinafter
the "PHASE-OUT PERIOD").
(b) During the term of the Phase-Out Period, Getty Investments grants
to Getty Images and its subsidiaries a written licence to use the
Getty Marks throughout the world in connection with the goods,
services and business of
<PAGE>
Getty Images and its subsidiaries, subject to the following terms and
conditions:
(i) the license shall become effective as of the date of the
assignment and shall expire one year from said date;
(ii) the license shall be royalty free;
(iii) all use of the Getty Marks by Getty Images and its
subsidiaries during the Phase-Out Period shall inure to
the benefit of Getty Investments, and all such uses shall
bear appropriate legal notices indicating that the marks
are being used under license from Getty Investments;
(iv) Getty Images shall maintain the same high standard of
quality for the goods and services offered for sale and
sold under the Getty Marks as it maintained while they
were under its ownership, and Getty Investments shall have
the right to make such inquiries, and to conduct such
investigations, as it reasonably deems necessary to insure
the continued maintenance by Getty Images of this high
standard of quality; and
(v) upon the expiration of the Phase-Out Period, Getty Images
and its subsidiaries shall immediately cease to use, in
any manner and for any purpose, directly or indirectly,
any of the Getty Marks, and promptly destroy all remaining
inventory of materials bearing any of the Getty Marks.
4. ADOPTION OF NEW NAMES AND MARKS
(a) During the Phase-Out Period, Getty Investments shall have the
right to determine that the new trade names, trademarks and
service marks to be used by Getty Images and its subsidiaries
(hereinafter "NEW NAMES AND MARKS") do not contain the Getty
Marks nor be confusingly similar to any of the Getty Marks.
(b) No later than ninety (90) days prior to the expiration of the
Phase-Out Period, Getty Images shall submit for the review of
Getty Investments its proposed new Names and Marks. Getty
Investments shall have thirty (30) days within which to object to
such new Names and Marks. If Getty Investments fails to respond
in writing within this period, Getty Investments shall have no
further right to object.
(c) Upon the expiration of the Phase-Out Period, Getty Images and
those of its subsidiaries that use the Getty Marks in their
corporate name shall take all appropriate steps to change its
corporate names, to communicate this change to their customers,
and shall cease to use the Getty Marks.
<PAGE>
5. FURTHER ASSURANCE
(a) Getty Images shall, if requested by Getty Investments, procure
that any subsidiary of it that uses the Getty Marks shall enter
into an agreement with Getty Investments in similar terms to
this Agreement (the "SUBSIDIARY AGREEMENT") save that if such
subsidiary ceases to be a subsidiary of Getty Images without also
ceasing its use of the Getty Marks and transferring any ownership
rights to Getty Images, the Phase Out Period in the Subsidiary
Agreement shall be 10 days.
(b) Getty Images agrees that it will and will procure that its
subsidiaries will do and execute all necessary acts and documents
to give effect to this Agreement.
6. NOTICES
All notices or other communications required or permitted by this
Agreement shall be in writing and sent to the parties at the following
addresses:
TO GETTY INVESTMENTS:
Getty Investments LLC
1325 Airmotive Way, Suite 262
Reno
Nevada 89502
USA
Attention: Jan Moehl/Mark Jenness
TO GETTY IMAGES:
Getty Images, Inc
101 Bayham Street
Camden Town
London NW1 0AG
England
Attention: Jonathan Klein
TO GETTY COMMUNICATIONS:
Getty Communications plc
101 Bayham Street
Camden Town
London NW1 0AG
England
Attention: Jonathan Klein
<PAGE>
7. MISCELLANEOUS
(a) This agreement is governed exclusively by Delaware law.
(b) To the fullest extent permitted by law any controversy or claim
arising out of or relating to this Agreement, or the breach
thereof, shall be settled by mandatory final and binding
arbitration in New York City, New York, USA under the auspices of
and in accordance with the rules, then obtaining, of the American
Arbitration Association, to the extent not inconsistent with the
Delaware Uniform Arbitration Act and judgment upon the award
tendered may be entered in any court having jurisdiction thereof.
The reasonable fees, costs and expenses, including legal fees,
incurred in connection with such arbitration shall be borne
equally by the parties. Nothing in this paragraph 7(b) shall
limit any right that any party may otherwise have to seek to
obtain preliminary injunctive relief in order to preserve the
status quo pending the disposition of any such arbitration
proceeding.
(c) In the event of an action for breach of this agreement, the
parties acknowledge that recovery of damages shall not be a
sufficient remedy, and the aggrieved party shall be entitled to
specific performance thereof in addition to other legal remedies
to which it may be entitled.
(d) Getty Investments shall have the right to record this agreement
against any and all applications and registrations of the Getty
Marks with the appropriate governmental agencies of the United
States, the United Kingdom and the European Union and any other
jurisdictions.
(e) This agreement is binding upon the parties hereto, their
subsidiaries, divisions and all those acting in concert or in
participation with them or under their direction or control, and
upon their successor and assigns.
(f) In the event that a Getty Images subsidiary which has not
executed this agreement uses any of the Getty Marks at any time
in the future, such entity shall be required by Getty Images to
execute this agreement in counterpart, and Getty Investments
shall be provided a copy of said counterpart.
(g) This agreement embodies the entire agreement of the parties
hereto and supersedes all prior negotiations, understandings and
agreements whether written or oral. No part of this agreement
may be varied by any party hereto, except by a writing signed by
each of the parties.
IN WITNESS THEREOF, the parties have caused this agreement to be executed by
their duly authorised officers.
<PAGE>
Date: GETTY INVESTMENTS LLC
--------------------------
By: /s/ Jan D. Moehl
---------------------------------
Name: Jan D. Moehl
---------------------------------
Title: Officer
---------------------------------
Date: GETTY IMAGES, INC.
--------------------------
By: /s/ Mark Torrance
---------------------------------
Name: Mark Torrance
---------------------------------
Title: Director
---------------------------------
Date: GETTY COMMUNICATIONS PLC
--------------------------
By: /s/ Mark Getty
---------------------------------
Name: Mark Getty
---------------------------------
Title: Director
---------------------------------
<PAGE>
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of the 28th day of June, 1996, by and between Jan D. Moehl, an individual
("Pledgor"), and the Trustees of the Cheyne Walk Trust (collectively, "Secured
Party"), and is made with reference to the following facts:
A. Secured Party has made a loan ("Loan") to Pledgor in the
original principal amount of $100,000, as evidenced by that certain Secured
Promissory Note, of even date herewith, in the original principal amount of
$100,000, together with interest at the rate described therein, made by Pledgor
to the order of Secured Party (the "Note").
B. Pledgor is the owner of certain issued and outstanding
American Depository Shares of Getty Communications plc, a public limited company
incorporated under the laws of England and Wales (the "Corporation").
C. It is a condition precedent to the making of the Loan by
Secured Party pursuant to the Note that Pledgor shall have made the pledge
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter contained, the parties hereto hereby agree
as follows:
1. GRANT OF SECURITY INTEREST.
1.1 PLEDGE. As security for the obligations specified in
Section 2 hereof, Pledgor hereby pledges, assigns, transfers and grants to
Secured Party and Secured Party's successors, endorsees and assignees a security
interest in and to (a) those certain 10,000 American Depositary Shares (each
representing two Class A Ordinary Shares, nominal value one pence each) of the
Corporation owned by Pledgor ("ADSs") more fully described on Exhibit "A"
hereto, (b) all additional shares of the capital stock of any class of the
Corporation and, subject to the provisions of Section 7 hereof, any other
monies, securities, rights and property issued or received in exchange therefor
or with respect thereto, including, but not limited to, any cash dividends or
distributions, any shares that may be issued to Pledgor as a stock dividend and
any securities, rights or other property which Pledgor may hereafter receive or
be entitled to receive in exchange therefor, whether upon a merger,
reorganization, consolidation, stock split or reclassification, or otherwise;
and (c) any and all additions and substitutions thereto and therefor and the
proceeds of any of the foregoing (collectively the "Collateral"). The inclusion
of "proceeds" as a component of the Collateral shall not be deemed a consent by
Secured Party to any sale or disposition of all or any part of the Collateral.
<PAGE>
1.2 DELIVERY. In furtherance of the pledge, assignment,
transfer and grant of the security interest referred to in Section 1.1 hereof,
Pledgor shall (a) deliver to The Chase Manhattan Bank, N.A., at 1211 Avenue of
the Americas, 33rd Floor, New York, New York 10036, Attention: G. Martin Poole,
as agent for Secured Party ("Chase"), concurrently with the execution hereof,
all of the American Depositary Receipts evidencing the ADSs, certificates or
instruments representing the Collateral, stamped or marked as Secured Party may
require, together with duly executed or endorsed blank stock powers (in the form
of that attached hereto as Exhibit "A") and proxies or such other instruments of
assignment or transfer relating thereto as Secured party may require, and (b)
deliver to Chase, as soon as possible after receipt thereof, certificates and
other indicia of ownership representing any securities or other instruments
referred to in Section 1.1(b) hereof, stamped or marked as Secured Party may
require, together with duly executed or endorsed blank stock powers or such
other instruments of assignment or transfer relating thereto as Secured Party
may require. Secured Party shall have the right, at any time in its discretion
upon prior notice to Pledgor, to transfer to or to register in the name of
Secured Party or any of its nominees any or all of the Collateral, subject only
to the rights of Pledgor specified in Section 7 hereof. Secured Party shall
also have the right, at any time and from time to time, to appoint another agent
or agents for the purpose of retaining physical possession of the Collateral.
Secured Party shall have the right at any time to exchange certificates or
instruments representing or evidencing any of the Collateral for certificates or
instruments of smaller or larger denominations.
1.3 ADDITIONAL COLLATERAL RECEIVED BY PLEDGOR. Subject to
the provisions of Section 7 hereof, any money, securities or other property
hereafter received by Pledgor in respect of or in exchange or substitution for
any of the Collateral, and any additional shares of the capital stock or
securities of the Corporation of whatever class or nature, shall be, and shall
be deemed to have been, received by Pledgor as trustee for Secured Party, and
Pledgor shall pay and deliver all such sums, securities and other property over
to Secured Party immediately, without demand or notice. The same shall then be
held as Collateral by Secured Party as security for the obligations secured
hereby or, in the case of money but subject to the provisions of Section 7.2
hereof, applied to the indebtedness and obligations secured hereby as provided
in Section 12 hereof.
1.4 UNCERTIFICATED SECURITIES. Notwithstanding anything to
the contrary contained in Sections 1.1, 1.2 and 1.3 hereof, if any of the
Collateral (whether now owned or hereafter acquired) is evidenced by an
uncertificated security, Pledgor shall promptly notify Secured Party thereof and
shall promptly take all actions required to perfect the security interest of
Secured Party therein under applicable law (including, in any event, under
Sections 8313 and 8321 of the Uniform Commercial Code of the State of California
(the "UCC")). Pledgor further agrees to take such actions as Secured Party
deems necessary or desirable to effect the foregoing and to permit Secured Party
to exercise any of its rights and remedies hereunder.
2
<PAGE>
1.5 SPOUSAL CONSENT. Pledgor acknowledges that by this
Agreement Pledgor is also granting to Secured Party a security interest in the
entire community property interest, if any, of Pledgor's spouse in and to the
Collateral. Concurrently herewith, Pledgor shall cause his spouse to execute
and deliver to Secured Party a Spousal Consent in the form of that attached
hereto as Exhibit "B".
1.6 DUTIES AND RIGHTS OF SECURED PARTY. Pledgor agrees
that neither Secured Party nor Chase shall have any liability of any kind or
nature whatsoever with respect to the Collateral, other than to hold, release or
dispose of the same in accordance with the terms and provisions of this
Agreement. With respect to each particular item of Collateral, the security
interest herein granted shall attach immediately upon Pledgor's execution hereof
or as soon as Pledgor acquires rights in and to such item of Collateral,
whichever is later.
2. OBLIGATIONS TO BE SECURED. Whether or not recovery upon any
of the following secured obligations (the "Secured Obligations") is now or
hereafter becomes barred by any statute of limitations or is now or hereafter
becomes otherwise unenforceable, the security interests herein granted shall
secure (a) the prompt and complete payment and performance of all of the
obligations now or hereafter arising under the Note (including the payment of
amounts which would becomes due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a) and
interest which, but for the filing of a petition in bankruptcy, would accrue on
such obligations); and (b) the payment and reimbursement of all sums and
expenses, including, without limitation, reasonable attorneys' fees (including
allocated costs of internal counsel), court costs and collection, legal and
receivers' expenses, advanced or incurred by Secured Party in connection with
the perfection and protection of the security interest herein granted, the
preservation or disposition of the Collateral, or any part thereof, or the
enforcement by Secured Party of any of the foregoing obligations of Pledgor or
any guarantor thereof to Secured Party whether upon default by Pledgor or any
such guarantor or otherwise.
3. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor hereby
represents and warrants to Secured Party THAT:
3.1. VALIDITY OF COLLATERAL/TITLE TO COLLATERAL. The
Collateral has been duly authorized and validly issued, is fully paid and
nonassessable and has been issued in compliance in all material respects with
all applicable federal and state securities laws. Except for the community
property interest of Pledgor's spouse, if any, Pledgor is the sole legal and
beneficial owner of the Collateral, and, except for the security interests
granted to Secured Party herein and the community property interest of Pledgor's
spouse, if any, Pledgor has good and marketable title to all and every part of
the Collateral, free and clear of any security interest, lien, pledge,
encumbrance, option, conditional sale contract, lease or other title retention
agreement, or any other adverse claim of any nature whatsoever (collectively,
"Lien").
3
<PAGE>
3.2 PRIORITY. Upon the execution and delivery of this
Agreement by Pledgor and Secured Party's taking possession of the Collateral,
Secured Party shall have perfected security interests in and to the Collateral
having first priority for the full amount of all of the Secured Obligations.
3.3 NO DEFAULT OR REQUIRED CONSENT. Neither the execution
or delivery of this Agreement by Pledgor nor the effectuation by Secured Party
of any of its rights or remedies herein, whether upon default or otherwise, will
result in a breach of or constitute a default under any agreement or instrument
to which Pledgor is a party, or violate any law or any rule or regulation of any
administrative agency or any order, writ, injunction or decree of any court or
administrative agency, nor does any of the foregoing require the consent of any
person, entity or governmental agency or any notice or filing with any
governmental or regulatory body (except as may be required in connection with
any sale or disposition of the Collateral by laws affecting the offering and
sale of securities generally).
3.4 NO LITIGATION. There is no action, legal,
administrative or other proceeding pending or threatened against Pledgor's title
to or interest in the Collateral or against Pledgor's pledge of the Collateral
hereunder, nor does Pledgor know of any basis for the assertion of any such
claim.
4. AFFIRMATIVE COVENANTS.
Pledgor covenants that until such time as all of the Secured
Obligations are indefeasibly paid or satisfied in full, unless Secured Party
shall otherwise consent in writing:
4.1 PROTECTION OF SECURITY AND LEGAL PROCEEDINGS. Pledgor
shall, at its own expense, take any and all actions necessary to preserve,
protect and defend the security interest of Secured Party in the Collateral and
the perfection and priority thereof against any and all adverse claims,
including appearing in and defending any and all actions and proceedings which
purport to affect any of the foregoing; promptly reimburse Secured Party for any
and all sums, including costs, expenses and reasonable attorney's fees, which
Secured Party may pay or incur in defending, protecting or enforcing its
security interest in the Collateral or the perfection or priority thereof, or in
discharging any prior or subsequent Lien or adverse claim against the Collateral
or any part thereof, or by reason of becoming or being made a party to or
intervening in any action or proceeding affecting the Collateral or the rights
of Secured Party therein, all of which actions Pledgor hereby agrees that
Secured Party shall have the right to take in its sole and absolute discretion.
4.2 AUTHORIZED SALE. Pledgor shall keep the proceeds of
any collection, sale or disposition of any Collateral authorized by Secured
Party separate form Pledgor's other property and, until otherwise notified by
Secured Party, shall enforce all of Pledgor's rights with respect to any such
collection, sale or disposition, maintain accurate and
4
<PAGE>
complete records thereof and promptly deliver to Secured Party the proceeds
thereof as and when received.
4.3 INSPECTION. Pledgor shall give Secured Party such
information as may be requested concerning the Collateral and permit Secured
Party and its agents and representatives to enter upon any premises upon which
Pledgor's records concerning the Collateral or the Corporation are located for
the purpose of inspecting and auditing the same.
4.4 AUTHORITY OF SECURED PARTY. With respect to any
Collateral, Pledgor hereby consents and agrees that the Corporation shall be
entitled to accept the provisions of this Security Agreement as conclusive
evidence of the right of Secured Party to effect any transfer or exercise any
right hereunder or with respect to any such Collateral, notwithstanding any
other notice or direction to the contrary heretofore or hereafter given by
Pledgor or any other person to the Corporation or to any registrar, transfer
agent or trustee thereof.
4.5 FURTHER ASSURANCES. Pledgor shall from time to time
make, execute, acknowledge and deliver all such further documents, instruments
and assurances and take such further acts as may be requested by Secured Party
to perfect or preserve the security interest created by and to carry out the
intent of this Agreement. Without limiting the generality of the foregoing,
Pledgor shall, upon request of Secured party, execute and deliver to Secured
Party such financing statements and security agreements, in form and substance
satisfactory to Secured Party, as Secured party may require to effect and
perfect Secured party's security interest in the Collateral, including any
distributions or dividends paid in property other than cash or cash equivalents.
5. NEGATIVE COVENANTS. Pledgor covenants that until such time as
all of the Secured obligations are indefeasibly paid or satisfied in full,
without the prior written consent of Secured Party, it shall not directly or
indirectly, whether voluntarily, involuntarily, by operation of law or otherwise
(a) exchange, lease, lend, sell, encumber or dispose of the Collateral or any
part thereof, or any of Pledgor's rights therein, or grant any option with
respect thereto, nor (b) cause, suffer or permit the Collateral to be affected
by any Lien of any kind or nature whatsoever, other than the Lien of Secured
Party created hereby.
6. ADDITIONAL COVENANTS OF PLEDGOR.
6.1 PRESERVATION OF COLLATERAL. In case of any failure of
Pledgor to keep the Collateral free from Liens or adverse claims, or to pay
taxes on or in respect thereof, or fully and punctually to keep and perform any
other covenant hereof, then Secured Party may (but shall not be required to) pay
or contest or settle such taxes, Liens or adverse claims, or any judgments based
thereon, take any action to preserve any rights of or against any prior or other
parties in connection with the Collateral, exercise any voting rights or
managerial rights with respect to any Collateral, make or give any presentments,
demands for
5
<PAGE>
performance, notices of nonperformance, protests, notices of protests, notices
of dishonor or notices of any other nature whatsoever in connection with the
Collateral or the Secured Obligations, or otherwise make good any other
aforesaid failure of Pledgor. Pledgor shall promptly reimburse Secured party
for any sums paid or advanced by Secured Party for any such purpose, together
with interest at the rate specified in the Note from the date of any such
advance to the date of reimbursement.
6.2 ATTORNEY-IN-FACT. Pledgor hereby appoints Secured
Party as his attorney-in-fact with full power of substitution, to do any and all
acts which Pledgor is obligated by this Agreement to do and for the purpose of
carrying out the purposes of this Agreement and taking any action and executing
any instruments which Secured Party may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of
the foregoing Secured Party shall have the right and power to receive, endorse
and collect all checks made payable to Pledgor representing any payment or
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same, and to execute and deliver as such attorney-in-fact on
behalf of Pledgor all necessary instruments of sale, assignment, lease and
transfer of the Collateral, and any part thereof, sold, leased or otherwise
disposed of pursuant to this Agreement.
7. RIGHTS INCIDENT TO COLLATERAL.
7.1 IRREVOCABLE PROXY/VOTING RIGHTS. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's proxy holder with respect to the
Collateral with full power and authority to vote, give consents, ratifications
and waivers and otherwise act with respect to such Collateral on behalf of
Pledgor, PROVIDED that this proxy shall be operative only upon the occurrence of
an Event of Default (as defined in Section 8) hereunder. This proxy shall be
irrevocable for so long as any Secured Obligation remains outstanding. Until
such time, if any, as an Event of Default occurs, Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement. In order to evidence the provisions of this Section 7.1,
Pledgor shall execute and deliver to Secured Party an Irrevocable Proxy in the
form of that attached hereto as Exhibit "C".
7.2 RIGHTS TO DISTRIBUTIONS - NO DEFAULT. So long as no
Event of Default occurs, Pledgor may receive and retain for his own uses all
distributions made in the ordinary course in cash or cash equivalents in respect
of any of the Collateral. However, Pledgor shall cause the Corporation to pay
directly to Secured Party (a) one hundred percent (100%) of all distributions
made other than in cash or cash equivalents in respect of all Collateral, and
(b) one hundred percent (100%) of all distributions of cash or cash equivalents
made in respect of any Collateral in connection with a partial or total
liquidation or dissolution of the Corporation or in connection with a reduction
of capital, capital surplus or paid-in-surplus thereof, whether such
distributions be made by way of dividend, interest, distribution
6
<PAGE>
or otherwise. Distributions received under (a) above shall be retained by
Secured Party as Collateral; distributions received by Secured under (b) above
shall be applied by Secured party against the Secured Obligations in the manner
specified in Section 12 hereof.
7.3 RIGHTS TO DISTRIBUTION - EVENT OF DEFAULT. So long as
an Event of Default has occurred, at the option of Secured Party, all rights of
Pledgor to receive any distributions which it would otherwise be authorized to
receive and retain pursuant to Section 7.2 above shall cease, and all such
rights shall thereupon become vested in Secured Party. Secured Party shall
thereafter have the sole right to receive, and Pledgor shall cause the
Corporation to pay directly to Secured party, one hundred percent (100%) of all
distributions, whether in cash, cash equivalents or otherwise, which may be held
and/or applied by Secured Party against the Secured Obligations in such order
and manner as Secured Party, in its sole and absolute discretion, determines.
7.4 DISTRIBUTIONS HELD IN TRUST. All distributions from
the Corporation which are received by Pledgor contrary to the provisions of this
Agreement shall be received in trust for the benefit of Secured Party, shall be
segregated form other funds of Pledgor, and shall forthwith be paid over to
Secured party as pledged Collateral in the same form as so received (with any
necessary endorsements).
8. EVENT OF DEFAULT. The occurrence of any event of default
under the Note shall constitute an event of default ("Event of Default")
hereunder (giving effect to any grace periods and notification requirement set
forth in the Note).
9. REMEDIES OF SECURED PARTY. Upon the occurrence of any Event
of Default hereunder, then in addition to all other rights and remedies of
Secured Party under the Note or at law or in equity, upon the occurrence of such
Event of Default or at any time thereafter, Secured Party may exercise any and
all of the following rights and remedies, all of which shall be cumulative and
not mutually exclusive.
9.1 NOTIFICATION TO CORPORATION. Secured Party may notify
the Corporation of Secured Party's interest in the Collateral and instruct the
Corporation to make one hundred percent (100%) of all distributions in respect
of the Collateral directly to Secured Party or to Chase.
9.2 HANDLING OF FUNDS. Secured Party may require Pledgor
to hold in trust for Secured Party all distributions received by Pledgor without
commingling them with any other funds, and Secured Party may require Pledgor
either to turn over to Secured Party in the form received all checks, drafts,
cash and other remittances with any necessary endorsements, or to deposit them
immediately in a separate account maintained by or on behalf of Secured party.
7
<PAGE>
9.3 COMPROMISE OF CLAIMS. Secured Party may (a) settle and
adjust all disputes and claims directly with the Corporation with respect to any
distributions; (b) consent form time to time to the acceptance of security or
additional or substituted security of any kind for any obligation of the
Corporation or to the release, surrender or alteration of any such security; and
(c) deal as aforesaid or in any other manner with the Corporation with respect
to any distributions.
9.4 OTHER RIGHTS AND REMEDIES. Secured Party may pursue
and enforce all of the rights and remedies provided in this Agreement or
provided to secured parties at law or in equity, including, without limitation,
the provisions of the UCC, as amended. Without limiting the generality of the
foregoing, Secured Party may dispose of the Collateral or retain it in
satisfaction of the Secured Obligations and Secured Party may obtain specific
performance of any obligation of Pledgor contained herein without the necessity
of posting bond or proving that money damages are an inadequate remedy.
9.5 VOTING RIGHTS. Secured Party may exercise the voting
and consensual rights and powers, if any, which Pledgor is entitled to exercise
prior to any Event of Default pursuant to Section 7 hereof.
10. FURTHER REMEDIES.
10.1 DEMANDS, NOTICES, ETC.; COMMERCIALLY REASONABLE SALE.
All demands of performance, advertisements, notices of sale or retention, as
well as the presence of the Collateral at any sale and the constructive
possession of the Collateral by the person and conducting any sale, except only
as provided by Section 9504(3) of the UCC, are hereby specifically waived by
Pledgor. With respect to any Collateral consisting of securities, and whether
or not any of such Collateral has been effectively registered under the federal
Securities Act of 1933 (the "Securities Act") or other applicable laws, Secured
Party may, in its sole and absolute discretion, sell all or any part of such
Collateral at private sale in such manner and under such circumstances as
Secured Party may deem necessary or advisable in order that the sale may be
lawfully conducted. There may be other legal restrictions or limitations
affecting Secured Party in any attempt to dispose of all or any part of the
Collateral under applicable state "Blue Sky" laws or other state securities laws
or similar laws analogous in purpose or effect.
10.2 INFORMATION AS TO COMPLIANCE WITH LAW. If Secured
Party determines to exercise its right to sell any or all of the Collateral,
upon written request, Pledgor shall and shall cause each issuer of any
Collateral to be sold hereunder from time to time to furnish to Secured Party
all such information as Secured Party may request in order to determine the
number of shares and other instruments included in the Collateral which may be
sold by Secured Party as exempt transactions under the Securities Act and the
rules of the Securities and Exchange Commission thereunder, as the same are form
time to time in effect.
8
<PAGE>
10.3 FURTHER ASSURANCES. Pledgor further agrees to use its
best efforts to do or cause to be done all such other acts as may be necessary
to make any sale or sales of all or any portion of the Collateral pursuant to
Sections 10.1 and 10.2 hereof valid and binding and in compliance with any and
all applicable requirements of law.
11. RECEIPTS OF SALE. The receipt or receipts of any person
conducting as sale of any of any of the Collateral pursuant to this Agreement
for the purchase money paid at such sale shall be a sufficient discharge
therefor to any purchaser of the Collateral or any part thereof, and no such
purchaser, after paying such purchase money and receiving such receipt, shall be
bound to see to the application of such purchase money for any purpose of this
Agreement, or shall be bound to inquire as to the authorization, necessity,
expediency or regularity of such sale.
12. APPLICATION OF PROCEEDS. All sums received or collected by
Secured Party, whether before or after default, on or on account of the
Collateral, including, without limitation, the proceeds of any sale or
disposition thereof shall be applied to the installments of the Secured
Obligations, to the payment of any advances, charges, costs and expenses
incurred or paid by Secured Party and secured hereby, and to the payment of any
and all other obligations secured hereby, all in such order and manner as
Secured Party in its sole discretion determines. After such application and
after payment by Secured Party of any other amount required by law, including,
without limitation Section 9504(1)(c) of the UCC, Secured Party shall pay any
balance to Pledgor or to the person or persons entitled thereto upon proper
demand being made therefor, and in like manner, Pledgor shall pay to Secured
Party, without demand, whatever amount of the Secured Obligations remains unpaid
after the Collateral has been sold and the proceeds applied as aforesaid,
together with interest thereon from the date of demand at the rate specified in
the Note, which interest shall also constitute a part of the Secured
Obligations.
13. RETURN OF COLLATERAL. Subject to any duty imposed by law or
otherwise to the holder of any subordinate Lien on the Collateral known to
Secured Party, and subject to the direction of a court of competent
jurisdiction, upon the payment in full of the Secured Obligations, Pledgor shall
be entitled to return of the Collateral in the possession of Secured Party;
PROVIDED, HOWEVER that Secured Party shall not be obligated to return to Pledgor
or deliver to the holder of any subordinate Lien any such Collateral until it is
satisfied that all amounts with respect to the Secured Obligations are no longer
subject to being recaptured under applicable bankruptcy or insolvency laws or
otherwise. The return of Collateral, however effected, shall be without
recourse to Secured Party and Secured Party shall be entitled to receive
appropriate documentation to such effect. The return of Collateral shall be
effected without representation or warranty and shall not entitle Pledgor to any
right to any endorsement.
14. OBTAINING OF REQUIRED APPROVALS. To the extent the exercise
by Secured Party of any remedy afforded herein requires the consent or approval
of any governmental
9
<PAGE>
agency or regulatory body, the right of Secured Party to exercise such remedy
shall be conditioned upon receipt by Secured Party of such consent or approval.
In furtherance of the exercise by Secured Party of the power of sale granted to
it herein, Pledgor agrees that, upon request of Secured Party and without
expense to Secured Party, Pledgor shall use his best efforts to obtain all
necessary approvals from all applicable foreign, federal, state and local
governmental agencies, authorities and instrumentalities for the sale by Secured
Party of the Collateral, or any part thereof.
15. CUMULATIVE RIGHTS, NO WAIVER. The several rights and remedies
of Secured Party hereunder or referred to herein shall, to the full extent
permitted by law, be construed as cumulative, and no one of them is exclusive of
the others. No delay or omission of Secured Party in exercising any right or
remedy created by, connected with or provided in this Agreement or arising from
any event of default hereunder shall be construed as or deemed to be an
acquiescence therein or a waiver of such default or a waiver of or limitation
upon the right of Secured Party to exercise, at any time and from time to time
thereafter, any right or remedy under this Agreement. No waiver of any breach
of any of the covenants or conditions of this Agreement shall be construed to be
a waiver of or acquiescence in or consent to any preceding or subsequent breach
of the name of any other condition or covenant. In the event of any default
hereunder, Secured Party may maintain an action hereon and may maintain
successive actions for each other default. The rights of Secured Party
hereunder shall not be exhausted by its exercise of any of its rights and
remedies or by any such action or by any member of successive actions until and
unless all indebtedness secured hereby has been paid in full.
16. SECURED PARTY'S POSSESSION OF COLLATERAL. Secured Party's
sole duty with respect to the Collateral in its possession shall be to use
reasonable care in the custody and preservation thereof. Secured Party shall be
deemed to have exercised reasonably care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property. Under
no circumstances shall Secured Party be responsible for any injury or loss to
the Collateral, or any part thereof, arising from theft, acts of God, flood,
fire or from any other cause beyond its reasonable control.
17. INDEMNIFICATION. Secured Party shall incur no liability if
any action taken by Secured Party or on Secured Party's behalf in good faith
pursuant to any provision of this Agreement shall prove to be in whole or in
part inadequate or invalid and Pledgor agrees to indemnify, defend and hold
Secured Party, and its trustees and their respective officers, directors,
shareholders, employees, agents and attorneys free and harmless from and against
any loss, liability, claim or damage, including without limitation, all
reasonable attorneys' fees and court costs incurred (a) in connection with any
such action or actions, and (b) in respect of any claims or allegations of third
parties arising out of Pledgor's use and ownership of the Collateral or Secured
Party's possession of the Collateral or its security interest therein.
10
<PAGE>
18. ASSIGNMENT OF OBLIGATIONS. Upon prior notice to Pledgor,
Secured Party may transfer or negotiate any Secured Obligation and upon such
transfer or negotiation Secured Party may transfer therewith all or any part of
the Collateral. Thereupon Secured Party shall be wholly discharged from all
liability and responsibility with respect to the Collateral so transferred.
With respect to any indebtedness or Collateral not so transferred, Secured Party
shall retain all of its rights hereunder.
19. MISCELLANEOUS.
19.1 ATTORNEYS' FEES. Pledgor shall pay promptly to Secured
Party upon demand, reasonable attorney's fees (including allocated costs of
internal counsel) and all costs and other expenses paid or incurred by Secured
Party in collecting or compromising any Secured Obligation or in enforcing or
exercising its rights or remedies created by, connected with or provided in this
Agreement, whether or not suit is filed, expressly including, without
limitation, all costs, reasonable attorney's fees and expenses incurred by
Secured Party in connection with any insolvency, bankruptcy, reorganization,
arrangement or similar proceeding involving Pledgor or any other person that in
any way affects the exercise by Secured Party of its rights hereunder, and the
proceeds of disposition of any or all of the Collateral shall be applied to the
payment of such attorney's fees, costs and other expenses as provided herein.
19.2 NOTICES. All notices, demands and requests of any kind
which either party may be required or may desire to serve upon the other party
hereto in connection with this Agreement shall be in writing and either (a)
delivered in person, (b) transmitted by telex, facsimile or telecopy (provided
that any notice so given is also mailed as provided herein), (c) delivered by
Federal Express-Registered Trademark- or other similar nationally recognized
express commercial delivery services or (d) mailed by certified mail, postage
prepaid, return receipt requested, and addressed as follows:
If to Secured Party: The Cheyne Walk Trust
1325 Airmotive Way, #262
Reno, Nevada 89502-3240
Facsimile: (702) 786-5414
If to Pledgor: Jan D. Moehl
8505 Dieringer Drive
Reno, Nevada 89511
Each such communication or notice shall be effective (i) if given by telex,
facsimile or telecopy, when transmitted, (ii) if given by mail, seven (7) days
after such communication is deposited in the mail and addressed as aforesaid,
(iii) if given by Federal Express-Registered Trademark- or similar commercial
delivery service, three (3) business days after such communication is deposited
with such service and addressed as aforesaid, and (iv) if given by any other
means, when
11
<PAGE>
actually delivered at such address. Either party shall have the right to change
the person and/or address to which notices hereunder shall be given, by notice
to the other party in the manner set forth above.
19.3 REVIVAL OF SECURITY INTERESTS. Secured Party's rights
and security interests hereunder shall be reinstated and revived, and the
enforceability of this Agreement shall continue, with respect to any amount at
any time paid on account of the Secured Obligations which thereafter shall be
required to be restored or returned by Secured Party upon the bankruptcy,
insolvency or reorganization of Pledgor, the Corporation or any other person,
all as though such amount had not been paid.
19.4 AMENDMENT; WAIVER. This Agreement may not be altered
or amended except by the written agreement of the parties hereto. No provision
of this Agreement or right of Secured Party hereunder can be waived nor can
Pledgor be released from its obligations hereunder except by a writing duly
executed by Secured Party.
19.5 SEVERABILITY. Should any one or more provisions of
this Agreement be determined to be illegal or unenforceable, all other
provisions of this Agreement nevertheless shall be effective.
19.6 TERMINOLOGY. Where the context or construction
requires, all words applied in the plural shall be deemed to have been used in
the singular and vice versa, and the neuter shall include the masculine and
feminine. All terms used herein shall have the same meaning as in the provisions
of the UCC, as amended.
19.7 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
19.8 APPLICABLE LAW. This Agreement is to be governed by
and construed in accordance with the laws of the State of California.
19.9 TRIAL BY JURY. PLEDGOR HEREBY WAIVES, AND COVENANTS
THAT HE WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT TO ANY ISSUE, CLAIM, DEMAND,
ACTION OR CAUSE OR ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
SUBJECT MATTER HEREOF, ANY DOCUMENT RELATING HERETO OR ANY SECURED OBLIGATION,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
IN TORT OR OTHERWISE.
IN WITNESS WHEREOF, the parties herein have executed this
Agreement the day and year first above written.
12
<PAGE>
"PLEDGOR":
/s/ Jan D. Moehl
-------------------------------------------
Jan D. Moehl
"SECURED PARTY":
The Trustees of the Cheyne Walk Trust
By: /s/ Jan D. Moehl
--------------------------------------
Jan D. Moehl, Chief Operating Officer
13
