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ITEM 1.01.
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ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
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On February 24, 2008, Getty Images, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Abe Investment, L.P., a Delaware limited partnership
(“Parent”), and Abe Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”). Parent and Merger Sub are affiliates of Hellman & Friedman LLC.
The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company, with
the Company continuing as the surviving corporation (the “Merger”). As a result of the Merger, the Company will become a wholly owned subsidiary of Parent and each outstanding share of the Company’s common stock will be converted into
the right to receive $34.00 in cash, without interest, other than (a) shares held by any stockholders who are entitled to and who properly exercise appraisal rights under Delaware law and (b) shares held by Parent or any of its
subsidiaries, including shares to be contributed to Parent by Getty Investments L.L.C., Mark Getty (the Company’s Chairman of the Board and co-founder) and certain related parties (the “Rollover Investors”) immediately prior to the
completion of the Merger.
The Company has made customary representations and warranties and covenants in the Merger Agreement, including, among others,
(i) to cause a meeting of the Company’s stockholders to be held to consider the adoption of the Merger Agreement, and (ii) subject to certain exceptions, for the Company’s Board of Directors (the “Board”) to recommend
that the Company’s stockholders adopt the Merger Agreement.
The Merger Agreement contains restrictions on the Company’s ability to solicit third
party proposals or provide information to, or participate in discussions or negotiations with, third parties regarding competing proposals. These restrictions are not applicable until April 4, 2008, however, with respect to a certain party with
whom the Company has previously engaged in discussions with respect to a proposal. In addition, the Merger Agreement contains customary exceptions that allow the Company to provide information to, and participate in discussions or negotiations with,
third parties with respect to competing proposals in certain circumstances.
The Company may terminate the Merger Agreement under specified circumstances
in order to enter into a definitive agreement implementing a Superior Proposal (as defined in the Merger Agreement). If the Company so terminates the Merger Agreement, the Company is required to pay Parent a termination fee equal to $31 million if
such termination occurs on or prior to April 4, 2008 or a termination fee equal to $52 million if such termination occurs after April 4, 2008. The Company also may be obligated to pay a termination fee to Parent of $52 million if the
Merger Agreement is terminated under other specified circumstances.
If the Merger Agreement is terminated by the Company under certain specified
circumstances (including Parent’s failure to consummate the Merger if certain conditions precedent have been met), Parent will be required to pay or cause to be paid to the Company a fee of $78 million, which is the maximum liability of Parent
or Merger Sub in connection with the Merger Agreement. An affiliate of Hellman & Friedman LLC has delivered to the Company an unconditional guarantee of Parent’s obligation to pay such termination fee under the Merger Agreement.
The Board has (i) approved the Merger Agreement and the Merger, (ii) determined that the consideration to be
paid in the Merger is fair to the Company’s stockholders and (iii) resolved to recommend that the Company’s stockholders adopt the Merger, the Merger Agreement and the transactions contemplated by the Merger Agreement.
Debt financing commitments of $1.045 billion have been provided by Barclays Bank PLC, General Electric Capital Corporation and The Royal Bank of Scotland PLC.
Consummation of the Merger is not subject to a financing condition, but is subject to various other conditions, including the adoption of the Merger Agreement by holders of a majority of the outstanding shares of the Company’s common stock,
adoption of the Merger Agreement by holders of a majority of the shares of the Company’s common stock present in person or by proxy and voting at the Company’s stockholders meeting that are held by holders other than the Rollover Investors
and Jonathan Klein (the Company’s Chief Executive Officer and a director of Getty Investments L.L.C.), the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, approvals under certain
foreign antitrust laws and the requirement that Consolidated EBITDA (as defined in the Merger Agreement) for the twelve month period ending March 31, 2008 (or, if the closing of the Merger occurs on or after September 2, 2008, for the
twelve month period ending June 30, 2008) shall not be less than $300 million.
The Rollover Investors, who collectively own approximately 15% of the
Company’s common stock, have agreed with Parent to vote in favor of the transaction and against any competing proposal.
In connection with a change
of control of the Company, Getty Investments L.L.C. has the right to call for an assignment to it, for a nominal sum, of all the Company’s rights to the “Getty Images” trademarks and trademark applications. Getty Investments L.L.C.
has agreed with Parent to waive such right in connection with the Merger and to certain other amendments to its agreement with the Company with respect to such trademarks.
The parties to the Merger Agreement expect the Merger to close during the second quarter of 2008.
The foregoing summary of
the Merger Agreement, and the transactions contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is attached as Exhibit 2.1 hereto and incorporated
herein by reference.
The Merger Agreement has been included to provide investors and security holders with information regarding the terms of the Merger.
It is not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Merger Agreement, which were made only for purposes of that agreement and as of specific dates, were solely
for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the
parties to the Merger Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party
beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Parent or Merger Sub or any of
their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected
in the Company’s public disclosures.
