UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 18, 2015
SCRIPPS NETWORKS INTERACTIVE, INC.
(Exact Name of Registrant as Specified in its Charter)
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| Ohio |
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1-34004 |
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61-1551890 |
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of Incorporation) |
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(Commission
File Number) |
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(I.R.S. Employer
Identification No.) |
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| 9721 Sherrill Boulevard
Knoxville, Tennessee |
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37932 |
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(Zip Code) |
Registrant’s telephone number including area code: (865) 694-2700
Not applicable
(Former
Name or Address, if Changed Since Last Report)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement
As previously announced, on March 14, 2015, Scripps Networks Interactive, Inc. (the “Company”) entered into an agreement by and
among ITI Media Group Limited, a Cypriot limited liability company, Groupe Canal+ S.A., a French company, and Southbank Media Ltd., an English company and our indirect wholly-owned subsidiary, pursuant to which the Company will acquire (the
“Acquisition Agreement”) all of the outstanding shares of N-Vision B.V., a Dutch limited liability company (“N-Vision”). In furtherance of the Acquisition Agreement, the Company announced its intention to issue unsecured senior
debt to finance the transaction.
On June 2, 2015, Scripps Networks Interactive, Inc. (the “Company”) completed the
sale (the “Offering”) of its $600,000,000 in aggregate principal amount of 2.800% Senior Notes due 2020 (the “2020 Notes”), $400,000,000 in aggregate principal amount of 3.500% Senior Notes due 2022 (the “2022 Notes”)
and $500,000,000 in aggregate principal amount of 3.950% Senior Notes due 2025 (the “2025 Notes” and together with the 2020 and 2022 Notes, the “Notes”). The Notes were issued in the form filed as Exhibits 4.2, 4.3 and
4.4 hereto and are governed by the terms of an Indenture, dated as of December 1, 2011 (the “Base Indenture”), entered into with U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by a Third
Supplemental Indenture thereto, dated as of June 2, 2015, between the Company and the Trustee (the “Third Supplemental Indenture” and together with the Base Indenture, the “Indenture”). The Notes will be unsecured
senior obligations of the Company and will rank equally in right of payment with the Company’s existing and future unsecured and unsubordinated indebtedness.
The Company will pay interest on the Notes semi-annually on June 15 and December 15 of each year and on the maturity date of the
Notes, beginning on December 15, 2015. Interest on the Notes will be computed on the basis of a 360-day year composed of twelve 30-day months. The 2020 Notes will mature on June 15, 2020, the 2022 Notes will mature on June 15, 2022
and the 2025 Notes will mature on June 15, 2025.
The Company may, at its option, redeem the 2020 Notes in whole or in part at any
time prior to May 15, 2020 (the date that is one month prior to the maturity date of the 2020 Notes), the 2022 Notes in whole or in part at any time prior to April 15, 2022 (the date that is two months prior to the maturity date of the
2022 Notes) and the 2025 Notes in whole or in part at any time prior to March 15, 2025 (the date that is three months prior to the maturity date of the 2025 Notes) at a redemption price equal to the greater of: (1) 100% of the principal
amount of the Notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest in respect of the Notes to be redeemed (not including any portion of such payments of interest accrued as of
the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Third Supplemental Indenture) plus 20 basis points with
respect to the 2020 Notes, and 25 basis points with respect to the 2022 Notes, and 30 bases points in the case of the 2025 Notes, plus, in each case, accrued and unpaid interest on the Notes to the redemption date.
If the 2020 Notes are redeemed on or after May 15, 2020 (the date that is one month prior to the maturity date of the 2020 Notes), the
2022 Notes are redeemed on or after April 15, 2022 (the date that is two months prior to their maturity date, or the 2025 Notes are redeemed on or after March 15, 2025 (the date that is three months prior to the maturity date of the 2025
Notes), such Notes will be redeemed at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus, in each case, accrued and unpaid interest to the redemption date.
If a change of control triggering event (as described more fully in the Third Supplemental Indenture) occurs, the Company will be required to
offer to purchase the Notes from the holders at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the repurchase date.
The 2020 Notes, the 2022 Notes and the 2025 Notes contain a Special Mandatory Redemption clause
(the “Special Mandatory Redemption”). Upon the occurrence of a Special Mandatory Redemption Trigger, as defined below, the Company will be required to redeem the Notes at a redemption price equal to 101% of the aggregate principal amount
of the Notes plus accrued and unpaid interest to, but excluding, the Special Mandatory Redemption Date, which is the earlier of January 30, 2016 if the transactions contemplated by the Acquisition Agreement have not been consummated by
December 31, 2015 or the 30th day following the termination of the Acquisition Agreement. A Special Mandatory Redemption Trigger (“Special Mandatory Redemption Trigger”) means the
earlier of December 31, 2015 if the transactions contemplated by the Acquisition Agreement have not been consummated by such date or the termination of the Acquisition Agreement.
The Indenture contains customary events of default. If an event of default with respect to the Notes has occurred and is continuing, the
Trustee or the holders of not less than 25% in aggregate principal amount of the Notes may declare the principal of all the Notes to be due and payable immediately.
The foregoing description of the Third Supplemental Indenture (including the form of the Notes) is qualified in its entirety by the terms of
such agreement, which is incorporated herein by reference and attached as Exhibit 4.1 hereto.
Item 8.01 Other Events
On May 18, 2015, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities
LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and Mitsubishi UFJ Securities (USA), Inc., as the representatives of the several underwriters listed therein, relating to the sale by the Company of the
Notes.
The foregoing description of the Underwriting Agreement is qualified in its entirety by reference to the Underwriting Agreement,
which is attached hereto as Exhibit 1.1 and is incorporated herein by reference.
On May 18, 2015, the Company filed a Current Report
on Form 8-K to file, among other things, certain pro forma financial information of the Company relating to the acquisition of N-Vision. Filed as Exhibit 99.1 hereto is revised pro forma financial information reflecting the actual pricing terms of
the Offering.
Item 9.01. Financial Statements and Exhibits.
(a) Pro Forma Financial Statements
The
unaudited pro forma condensed combined balance sheet of Scripps Networks Interactive, Inc. as of March 31, 2015 and the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2015 and for the
year ended December 31, 2014 are filed as Exhibit 99.1 hereto.
(d) Exhibits
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| 1.1 |
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Underwriting Agreement, dated May 18, 2015, among Scripps Networks Interactive, Inc. and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and Mitsubishi UFJ
Securities (USA), Inc., as the representatives of the several underwriters listed therein |
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| 4.1 |
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Third Supplemental Indenture, dated as of June 2, 2015, between Scripps Networks Interactive, Inc. and U.S. Bank National Association |
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| 4.2 |
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Form of Global Note Representing the 2020 Notes (included in Exhibit 4.1) |
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| 4.3 |
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Form of Global Note Representing the 2022 Notes (included in Exhibit 4.1) |
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| 4.4 |
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Form of Global Note Representing the 2025 Notes (included in Exhibit 4.1) |
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| 5.1 |
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Opinion of Thompson Hine LLP |
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| 99.1 |
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Scripps Networks Interactive, Inc. – Unaudited pro Forma Condensed Combined Financial Information |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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SCRIPPS NETWORKS INTERACTIVE, INC. |
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| Date: June 2, 2015 |
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By: |
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/s/ Lori A. Hickok |
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Lori A. Hickok |
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Executive Vice President and Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
EXHIBIT INDEX
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| Exhibit No. |
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Description |
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| 1.1 |
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Underwriting Agreement, dated May 18, 2015, among Scripps Networks Interactive, Inc. and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and Mitsubishi UFJ Securities
(USA), Inc., as the representatives of the several underwriters listed therein |
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| 4.1 |
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Third Supplemental Indenture, dated as of June 2, 2015, between Scripps Networks Interactive, Inc. and U.S. Bank National Association |
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| 4.2 |
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Form of Global Note Representing the 2020 Notes (included in Exhibit 4.1) |
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| 4.3 |
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Form of Global Note Representing the 2022 Notes (included in Exhibit 4.1) |
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| 4.4 |
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Form of Global Note Representing the 2025 Notes (included in Exhibit 4.1) |
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| 5.1 |
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Opinion of Thompson Hine LLP |
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| 99.1 |
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Scripps Networks Interactive, Inc. – Unaudited pro Forma Condensed Combined Financial Information |
Exhibit 1.1
Execution Version
Scripps Networks Interactive, Inc.
$600,000,000 2.800% Senior Notes due 2020
$400,000,000 3.500% Senior Notes due 2022
$500,000,000 3.950% Senior Notes due 2025
Underwriting Agreement
May 18, 2015
J.P. Morgan
Securities LLC
383 Madison Avenue
New York, New York 10179
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
One Bryant Park
New York, New York 10036
Mitsubishi UFJ Securities (USA), Inc.
1633 Broadway, 29th Floor
New York, New York 10019-6708
Wells Fargo Securities, LLC
550 South Tryon Street
Charlotte, North Carolina 28202
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
Ladies and Gentlemen:
Scripps Networks Interactive, Inc., an Ohio corporation (the “Company”), proposes to issue and sell to the several
Underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom you are acting as representatives (the “Representatives”), $600,000,000 principal amount of its 2.800% Senior Notes due 2020 (the “2020
Securities”), $400,000,000 principal amount of its 3.500% Senior Notes due 2022 (the “2022 Securities”) and $500,000,000 principal amount of its 3.950% Senior Notes due 2025 (the “2025 Securities”, and together with the 2020
Securities and the 2022 Securities, the “Securities”). The Securities will be issued pursuant to an indenture dated December 1, 2011 (the “Base Indenture”) between the Company and U.S. Bank National Association, as trustee
(the “Trustee”), as supplemented by a third supplemental indenture to be dated as of June 2, 2015 (the “Supplemental Indenture” and together with the Base Indenture, the “Indenture”).
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On March 14, 2015, the Company and Southbank Media Ltd., an indirect wholly-owned subsidiary
of the Company (the “Buyer”), entered into an agreement (the “Share Purchase Agreement”) for the sale and purchase of shares in the capital of N-Vision B.V. (“N-Vision”) with ITI Media Group Limited and Groupe
Canal+ S.A. (collectively, the “Sellers”) pursuant to which the Buyer agreed to purchase of all of the outstanding shares in the capital of N-Vision B.V. for a purchase price of €584 million (the “Acquisition”).
The Company intends to use the proceeds of the offering of the Securities to finance part of the cash consideration due in respect of the Acquisition. For purposes of Section 3 of this Agreement, references to the “knowledge” of the
Company with respect to matters pertaining to N-Vision shall be limited to the actual knowledge of the Company.
The Company hereby
confirms its agreement with the several Underwriters concerning the purchase and sale of the Securities, as follows:
1. Registration Statement.
The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities
Act”), an automatic shelf registration statement on Form S-3 (File No. 333-200213), including a prospectus, relating to the Securities which became effective upon filing with the Commission. Such registration statement, including the
information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of the registration statement at the time of its effectiveness, is referred to herein as the “Registration Statement”; and as used herein,
the term “Base Prospectus” means the prospectus included in the Registration Statement at the time of its effectiveness, the term “Preliminary Prospectus” means each preliminary prospectus supplement specifically relating to the
Securities, filed together with the Base Prospectus pursuant to Rule 424(b) and the term “Prospectus” means the prospectus supplement, together with the Base Prospectus, in the form first used (or made available upon request of purchasers
pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales of the Securities. Any reference in this Agreement to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the effective date of the Registration Statement or the date of such Preliminary Prospectus or the Prospectus, as the case
may be and any reference to “amend”, “amendment” or “supplement” with respect to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after
such date under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Exchange Act”) that are deemed to be incorporated by reference therein. Capitalized terms used
but not defined herein shall have the meanings given to such terms in the Registration Statement and the Prospectus.
At or prior to the
time when sales of the Securities were first made (the “Time of Sale”), the Company had prepared the following information (collectively, the “Time of Sale Information”): a Preliminary Prospectus dated May 18, 2015, and each
“free-writing
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prospectus” (as defined pursuant to Rule 405 under the Securities Act) listed on Annex A hereto as constituting part of the Time of Sale Information.
2. Purchase of the Securities by the Underwriters.
(a) The Company agrees to issue and sell to the several Underwriters as provided in this Agreement, and each Underwriter, on the basis of the
representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company (i) the respective principal amount of the 2020 Securities set forth
opposite such Underwriter’s name in Schedule 1 hereto at a price equal to 99.059% of the principal amount thereof plus accrued interest, if any, from June 2, 2015 to the Closing Date (as defined below), (ii) the respective principal
amount of the 2022 Securities set forth opposite such Underwriter’s name in Schedule 1 hereto at a price equal to 99.065% of the principal amount thereof plus accrued interest, if any, from June 2, 2015 to the Closing Date and
(iii) the respective principal amount of the 2025 Securities set forth opposite such Underwriter’s name in Schedule 1 hereto at a price equal to 99.160% of the principal amount thereof plus accrued interest, if any, from June 2, 2015
to the Closing Date. The Company will not be obligated to deliver any of the Securities except upon payment for all the Securities to be purchased as provided herein.
(b) The Company understands that the Underwriters intend to make a public offering of the Securities as soon after the effectiveness of this
Agreement as in the judgment of the Representatives is advisable, and initially to offer the Securities on the terms set forth in the Prospectus. The Company acknowledges and agrees that the Underwriters may offer and sell Securities to or through
any affiliate of an Underwriter and that any such affiliate may offer and sell Securities purchased by it to or through any Underwriter.
(c) Payment for and delivery of the Securities will be made at the offices of Simpson Thacher & Bartlett LLP at 10:00 A.M., New York
City time, on June 2, 2015, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representatives and the Company may agree upon in writing. The time and date of such payment and
delivery is referred to herein as the “Closing Date”.
(d) Payment for the Securities shall be made by wire transfer in
immediately available funds to the account(s) specified by the Company to the Representatives against delivery to the nominee of The Depository Trust Company, for the account of the Underwriters, of one or more global notes representing the
Securities (collectively, the “Global Notes”), with any transfer taxes payable in connection with the sale of the Securities duly paid by the Company. The Global Notes will be made available for inspection by the Representatives not later
than 1:00 P.M., New York City time, on the business day prior to the Closing Date.
(e) The Company acknowledges and agrees that the
Underwriters are acting solely in the capacity of an arm’s length contractual counterparty to the Company with
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respect to the offering of Securities contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of,
the Company or any other person. Additionally, neither the Representatives nor any other Underwriter is advising the Company or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company
shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability
to the Company with respect thereto. Any review by the Underwriters of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on
behalf of the Company.
3. Representations and Warranties of the Company. The Company represents and warrants to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing thereof, complied in all material respects with the Securities Act and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by or on behalf of such Underwriter through the Representatives expressly for use in any Preliminary Prospectus.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and at the Closing Date will
not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company
makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by or on behalf of such Underwriter through the
Representatives expressly for use in such Time of Sale Information. No statement of material fact included in the Prospectus has been omitted from the Time of Sale Information and no statement of material fact included in the Time of Sale
Information that is required to be included in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing
Prospectus. The Company (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared, made, used, authorized, approved or referred to and will not prepare, make, use, authorize, approve or
refer to any “written communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Securities (each such communication by the Company or its agents and
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representatives (other than a communication referred to in clauses (i) (ii) and (iii) below) an “Issuer Free Writing Prospectus”) other than (i) any document not
constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act, (ii) the Preliminary Prospectus, (iii) the Prospectus, (iv) the documents listed on Annex A hereto as
constituting part of the Time of Sale Information, (v) any electronic road show or other written communications and (vi) the investor presentations dated May 8, 2015 and May 15, 2015, in each case approved in writing in advance
by the Representatives. Each such Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has been or will be (within the time period specified in Rule 433) filed in accordance with the Securities Act (to the extent
required thereby) and, when taken together with the Preliminary Prospectus filed prior to the first use of such Issuer Free Writing Prospectus, did not, and at the Closing Date will not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to any
statements or omissions made in each such Issuer Free Writing Prospectus in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by or on behalf of such Underwriter through the
Representatives expressly for use in any Issuer Free Writing Prospectus.
(d) Registration Statement and Prospectus. The
Registration Statement is an “automatic shelf registration statement” as defined under Rule 405 of the Securities Act that has been filed with the Commission not earlier than three years prior to the date hereof; and no notice of objection
of the Commission to the use of such registration statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Securities Act has been received by the Company. No order suspending the effectiveness of the Registration
Statement has been issued by the Commission and no proceeding for that purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering has been initiated or, to the Company’s knowledge, threatened by
the Commission; as of the applicable effective date of the Registration Statement and any amendment thereto, the Registration Statement complied and will comply in all material respects with the Securities Act and the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission thereunder (collectively, the “Trust Indenture Act”), and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment or supplement thereto and as of the Closing Date, the Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no
representation and warranty with respect to (i) that part of the Registration Statement that constitutes the Statement of Eligibility and Qualification (Form T-1) of the Trustee under the Trust Indenture Act or (ii) any statements or
omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by or on behalf of such Underwriter through the Representatives expressly for use in the Registration Statement and
the Prospectus and any amendment or supplement thereto.
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(e) Incorporated Documents. The documents incorporated by reference in the
Registration Statement, the Prospectus and the Time of Sale Information, when they were filed with the Commission conformed in all material respects to the requirements of the Exchange Act and none of such documents contained any untrue statement of
a material fact or omitted 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; and any further documents so filed and
incorporated by reference in the Registration Statement, the Prospectus or the Time of Sale Information, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and will not contain any 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.
(f) Financial Statements of the Company. The
financial statements and the related notes thereto of the Company and its consolidated subsidiaries included or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus comply in all material respects
with the applicable requirements of the Securities Act and the Exchange Act, as applicable, and present fairly, in all material respects, the financial position of the Company and its subsidiaries as of the dates indicated and the results of their
operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis throughout the
periods covered thereby, and the supporting schedules included or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus present fairly, in all material respects, the information required to be
stated therein. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement, the Prospectus and the Time of Sale Information fairly presents the information called for in all
material respects and is prepared in accordance with the Commission’s rules and guidelines applicable thereto.
(g)
Financial Statements of N-Vision. The financial statements and the related notes thereto of N-Vision and its consolidated subsidiaries included or incorporated by reference in the Registration Statement, the Time of Sale Information and the
Prospectus comply in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as applicable, and present fairly, in all material respects, the financial position of N-Vision and its subsidiaries as of the
dates indicated and the results of their operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with International Financial Reporting Standards applied on a consistent
basis throughout the periods covered thereby, and the supporting schedules included or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus present fairly, in all material respects, the information
required to be stated therein.
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(h) Pro Forma Financial Information. The pro forma financial information and
the related notes thereto included or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus present fairly the information shown therein, have been prepared in all material respects in accordance
with the applicable requirements of the Securities Act and the Exchange Act, as applicable, and the assumptions underlying such pro forma financial information are reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein.
(i) No Material Adverse Change. Since the date of the most recent
financial statements of the Company included or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus, (i) there has not been any material change in the capital stock or long-term debt of the
Company or any of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or any material adverse change in or affecting the business, properties,
management, financial position or results of operations of the Company and its subsidiaries taken as a whole; (ii) neither the Company nor any of its subsidiaries has entered into any transaction or agreement that is material to the Company and
its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Company and its subsidiaries taken as a whole; and (iii) neither the Company nor any of its subsidiaries has sustained any
material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or from any action, order or decree of any court or arbitrator or
governmental or regulatory authority, except in the case of each of clauses (i), (ii) and (iii) as otherwise disclosed in the Registration Statement, the Time of Sale Information and the Prospectus.
(j) No Material Adverse Change in N-Vision; Share Purchase Agreement. Since the date of the most recent financial statements of
N-Vision included or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus, to the knowledge of the Company, there has not been any material adverse change in or affecting the business, properties,
management, financial position or results of operations of the Company and its subsidiaries taken as a whole (for the purpose of this clause, treating N-Vision and its subsidiaries as if they were subsidiaries of the Company), except in each case as
otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(k) Organization and Good
Standing. The Company and each of its significant subsidiaries and, to the knowledge of the Company, N-Vision have been duly organized and are validly existing and in good standing under the laws of their respective jurisdictions of
organization, are duly qualified to do business and are in good standing in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged, except where the failure to be so qualified, in good standing or have such power or authority would not, individually or in the
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aggregate, have a material adverse effect on the business, properties, management, financial position or results of operations of the Company and its subsidiaries taken as a whole or on the
performance by the Company of its obligations under the Securities (a “Material Adverse Effect”). The subsidiaries listed in Schedule 2 to this Agreement are the only significant subsidiaries of the Company.
(l) Capitalization. The Company has an authorized capitalization as set forth in the Registration Statement, the Time of Sale
Information and the Prospectus under the heading “Capitalization” and all of the outstanding shares of capital stock or other equity interests of each significant subsidiary of the Company (if applicable) have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company according to the percentage of ownership as set forth in Schedule 2 hereto, free and clear of any lien, charge, encumbrance, security
interest, restriction on voting or transfer or any other claim of any third party.
(m) Due Authorization. The
Company has full right, power and authority to execute and deliver this Agreement, the Securities and the Indenture (collectively, the “Transaction Documents”) and to perform its obligations hereunder and thereunder; and all action
required to be taken for the due and proper authorization, execution and delivery of each of the Transaction Documents and the consummation of the transactions contemplated thereby has been or, for Transaction Documents other than this Agreement,
will be prior to the Closing Date duly and validly taken.
(n) The Indenture. The Indenture has been duly authorized
by the Company and is duly qualified under the Trust Indenture Act and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights
generally or by equitable principles relating to enforceability (collectively, the “Enforceability Exceptions”).
(o) The Share Purchase Agreement. The Share Purchase Agreement has been duly authorized by the Company and constitutes a valid
and legally binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.
(p) The Securities. The Securities have been duly authorized by the Company and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein, will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions,
and will be entitled to the benefits of the Indenture.
(q) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
8
(r) Descriptions of the Transaction Documents. Each Transaction Document and the
Share Purchase Agreement conforms in all material respects to the description thereof contained in the Registration Statement, the Time of Sale Information and the Prospectus.
(s) No Violation or Default. Neither the Company nor any of its significant subsidiaries is in violation of its charter or
by-laws or similar organizational documents. Neither the Company nor any of its subsidiaries is (i) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject; or (ii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of clauses (i) and (ii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.
(t) No Conflicts. The execution, delivery and performance by the Company of each of the Transaction Documents, the issuance and
sale of the Securities and compliance by the Company with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not (i) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Company or any of its subsidiaries or (iii) result in the violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i), (ii) and (iii) above, for any such conflict, breach, violation or default that would not, individually or in the
aggregate, have a Material Adverse Effect.
(u) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company of each of the Transaction Documents, the issuance and sale of the
Securities and compliance by the Company with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for the registration of the Securities under the Securities Act, the qualification of the
Indenture under the Trust Indenture Act and such consents, approvals, authorizations, orders and registrations or qualifications as may be required under applicable state securities laws in connection with the purchase and distribution of the
Securities by the Underwriters.
9
(v) Legal Proceedings. Except as described in the Registration Statement, the Time
of Sale Information and the Prospectus, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which the Company or any of its subsidiaries or, to the knowledge of the Company, N-Vision or any of its
subsidiaries is or may be a party or to which any property of the Company or any of its subsidiaries is or may be the subject that, individually or in the aggregate, if determined adversely to the Company or any of its subsidiaries, would reasonably
be expected to have a Material Adverse Effect; to the knowledge of the Company, no such investigations, actions, suits or proceedings are threatened or, contemplated by any governmental or regulatory authority or threatened by others; and
(i) there are no current or pending legal, governmental or regulatory actions, suits or proceedings that are required under the Securities Act to be described in the Registration Statement or the Prospectus that are not so described in the
Registration Statement, the Time of Sale Information and the Prospectus and (ii) there are no contracts or other documents that are required under the Securities Act to be filed as exhibits to the Registration Statement or described in the
Registration Statement and the Prospectus that are not so filed as exhibits to the Registration Statement or described in the Registration Statement, the Time of Sale Information and the Prospectus.
(w) Independent Accountants of the Company. Deloitte & Touche LLP, who have certified certain financial statements of
the Company and its subsidiaries, is an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight
Board (United States) and as required by the Securities Act.
(x) Independent Accountants of N-Vision. PwC Polska sp
z.o.o., who have certified certain financial statements of N-Vision and its consolidated subsidiaries, is an independent registered public accounting firm with respect to N-Vision and its subsidiaries within the applicable rules and regulations
adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.
(y) Title to Intellectual Property. To the knowledge of the Company, (i) the Company and its subsidiaries and N-Vision and
its subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses; and (ii) the conduct of their respective businesses will not conflict in any
material respect with any such rights of others, and the Company and its subsidiaries and N-Vision and its subsidiaries have not received any written, telephonic or electronic notice of any claim of material infringement or conflict with any such
rights of others.
(z) Investment Company Act. The Company is not and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as
10
described in the Registration Statement, the Time of Sale Information and the Prospectus, will not be an “investment company” or an entity “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, “Investment Company Act”).
(aa) Licenses and Permits. The Company and its subsidiaries and, to the knowledge of the Company, N-Vision and its subsidiaries
possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities (including the Federal
Communications Commission (the “FCC”) and any equivalent authority in each other jurisdiction in which the Company and its subsidiaries or N-Vision and its subsidiaries operate) that are necessary for the ownership or lease of their
respective properties or the conduct of their respective businesses as described in the Registration Statement, the Time of Sale Information and the Prospectus, except where the failure to possess or make the same would not, individually or in the
aggregate, have a Material Adverse Effect; and except as described in the Registration Statement, the Time of Sale Information and the Prospectus, neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, N-Vision nor any
of its subsidiaries has received notice of any revocation or modification of any such license, certificate, permit or authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the
ordinary course.
(bb) Disclosure Controls. The Company and its subsidiaries maintain an effective system of
“disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required disclosure. The Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 of the
Exchange Act.
(cc) Accounting Controls. The Company and its subsidiaries maintain systems of “internal control over
financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial
officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles, including, but not limited to internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with generally
11
accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization;
(iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any material differences; and (v) interactive data in eXtensible Business Reporting
Language included or incorporated by reference in the Registration Statement, the Prospectus and the Time of Sale Information is prepared in accordance with the Commission’s rules and guidelines applicable thereto. Except as disclosed in the
Registration Statement, the Time of Sale Information and the Prospectus, there are no material weaknesses in the Company’s internal controls.
(dd) No Unlawful Payments. None of the Company, any of its subsidiaries or, to the knowledge of the Company, any of its directors,
officers, employees, agents or affiliates, or any other person associated with or acting on behalf of the Company or any of its subsidiaries or, to the knowledge of the Company, N-Vision or any of its subsidiaries or any of its directors, officers,
employees, agents or affiliates, or any other person associated with or acting on behalf of the N-Vision or its subsidiaries has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including of any
government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office;
(iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption laws; or (iv) made, offered, agreed, requested or knowingly taken an act in furtherance of
any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit. The Company and its subsidiaries have instituted and maintain policies and
procedures designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws, and upon the closing of the Acquisition, such policies and procedures shall apply to N-Vision and its subsidiaries.
(ee) Compliance with Anti-Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance with and the Company, to its knowledge, is not aware that the operations of N-Vision and its subsidiaries are not and have not been at all times in compliance with applicable financial recordkeeping and reporting requirements,
including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable anti-money laundering statutes of all jurisdictions where the Company, N-Vision or any of their respective subsidiaries conduct business, the
rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or
12
body involving the Company or any of its subsidiaries or, to the knowledge of the Company, N-Vision or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.
(ff) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge
of the Company, any of its directors, officers, employees, agents or affiliates, or any other person associated with or acting on behalf of the Company or any of its subsidiaries or, to the knowledge of the Company, N-Vision or any of its
subsidiaries or any of its directors, officers, employees, agents or affiliates, or any other person associated with or acting on behalf of the N-Vision or its subsidiaries is currently the subject or the target of any sanctions administered or
enforced by the U.S. Government, (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) or the U.S. Department of State and including, without limitation, the designation as a
“specially designated national” or “blocked person”), the United Nations Security Council (“UNSC”), the European Union, Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively,
“Sanctions”), nor is the Company nor any of its subsidiaries, nor, to the knowledge of the Company, N-Vision nor any of its respective subsidiaries located, organized or resident in a country or territory that is the subject or the target
of Sanctions, including, without limitation, Cuba, the Crimea region of Ukraine, Iran, North Korea, Sudan and Syria (each, a “Sanctioned Country”); and the Company will not directly or indirectly use the proceeds of the offering of the
Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of
such funding or facilitation, is the subject or the target of Sanctions, except as otherwise exempt under U.S. law, (ii) to fund or facilitate any activities of or business in any Sanctioned Country, except as otherwise exempt under U.S. law or
(iii) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.
(gg) No Stabilization. The Company has not taken, directly or indirectly, any action designed to or that could reasonably be expected
to cause or result in any stabilization or manipulation of the price of the Securities.
(hh) Sarbanes-Oxley Act. There is
and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications.
(ii) Status under the Securities Act. The Company is not an ineligible issuer and is a well-known seasoned issuer, in each case
as defined under the Securities Act, in each case at the times specified in the Securities Act in connection with the offering of the Securities.
4. Further Agreements of the Company. The Company covenants and agrees with each Underwriter that:
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(a) Required Filings. The Company will file the final Prospectus with the
Commission within the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act, will file any Issuer Free Writing Prospectus (including the Term Sheet in the form of Annex B hereto) to the extent required by Rule
433 under the Securities Act; and will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Securities; and the Company will furnish copies of the Prospectus and each Issuer Free Writing
Prospectus (to the extent not previously delivered) to the Underwriters in New York City prior to 10:00 A.M., New York City time, on the business day next succeeding the date of this Agreement in such quantities as the Representatives may reasonably
request. The Company will pay the registration fees for this offering within the time period required by Rule 456(b)(1)(i) under the Securities Act (without giving effect to the proviso therein) and in any event prior to the Closing Date.
(b) Delivery of Copies. The Company will deliver, without charge, to each Underwriter during the Prospectus Delivery
Period (as defined below), as many copies of the Prospectus (including all amendments and supplements thereto and documents incorporated by reference therein) and each Issuer Free Writing Prospectus as the Representatives may reasonably request. As
used herein, the term “Prospectus Delivery Period” means such period of time after the first date of the public offering of the Securities as in the opinion of counsel for the Underwriters a prospectus relating to the Securities is
required by law to be delivered (or required to be delivered but for Rule 172 under the Securities Act) in connection with sales of the Securities by any Underwriter or dealer.
(c) Amendments or Supplements; Issuer Free Writing Prospectuses. Before making, preparing, using, authorizing, approving,
referring to or filing any Issuer Free Writing Prospectus, and before filing any amendment or supplement to the Registration Statement or the Prospectus, the Company will furnish to the Representatives and counsel for the Underwriters a copy of the
proposed Issuer Free Writing Prospectus, amendment or supplement for review and will not make, prepare, use, authorize, approve, refer to or file any such Issuer Free Writing Prospectus or file any such proposed amendment or supplement to which the
Representatives reasonably object.
(d) Notice to the Representatives. The Company will advise the Representatives promptly,
and confirm such advice in writing, (i) when any amendment to the Registration Statement has been filed or becomes effective; (ii) when any supplement to the Prospectus or any amendment to the Prospectus or any Issuer Free Writing
Prospectus has been filed; (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or the receipt of any comments from the Commission relating to the Registration
Statement or any other request by the Commission for any additional information; (iv) of the issuance by the Commission of any order suspending the effectiveness of the Registration Statement or preventing or suspending the use of any
14
Preliminary Prospectus or the Prospectus or the initiation or threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities Act; (v) of the occurrence of
any event within the Prospectus Delivery Period as a result of which the Prospectus, the Time of Sale Information or any Issuer Free Writing Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus, the Time of Sale Information or any such Issuer Free Writing Prospectus is
delivered to a purchaser, not misleading; (vi) of the receipt by the Company of any notice of objection of the Commission to the use of the Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the
Securities Act; and (viii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Securities for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and the Company will use its commercially reasonable efforts to prevent the issuance of any such order suspending the effectiveness of the Registration Statement, preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification of the Securities and, if any such order is issued, will obtain as soon as possible the withdrawal thereof.
(e) Time of Sale Information. If at any time prior to the Closing Date (i) any event shall occur or condition shall exist
as a result of which the Time of Sale Information as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the
circumstances, not misleading or (ii) it is necessary to amend or supplement the Time of Sale Information to comply with law, the Company will promptly notify the Underwriters thereof and forthwith prepare and, subject to paragraph
(c) above, file with the Commission (to the extent required) and furnish to the Underwriters and to such dealers as the Representatives may designate, such amendments or supplements to the Time of Sale Information as may be necessary so that
the statements in the Time of Sale Information as so amended or supplemented will not, in the light of the circumstances under which they were made, be misleading or so that the Time of Sale Information will comply with law.
(f) Ongoing Compliance. If during the Prospectus Delivery Period (i) any event shall occur or condition shall exist as a result of
which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Prospectus to comply with law, the Company will promptly notify the Underwriters thereof and forthwith
prepare and, subject to paragraph (c) above, file with the Commission and furnish to the Underwriters and to such dealers as the Representatives may designate, such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law.
15
(g) Blue Sky Compliance. The Company will qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request and will continue such qualifications in effect so long as required for distribution of the Securities; provided that the Company
shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process
in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.
(h) Earning Statement. The Company will make generally available to its security holders and the Representatives as soon as
practicable an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Company
occurring after the “effective date” (as defined in Rule 158) of the Registration Statement.
(i) Clear
Market. During the period from the date hereof through and including the business day following the Closing Date, the Company will not, without the prior written consent of the Representatives, offer, sell, contract to sell or otherwise dispose
of any debt securities issued or guaranteed by the Company and having a tenor of more than one year other than the Securities.
(j) Use of Proceeds. The Company will apply the net proceeds from the sale of the Securities as described in the Registration
Statement, the Time of Sale Information and the Prospectus under the heading “Use of proceeds”.
(k) No
Stabilization. The Company will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Securities.
(l) Record Retention. The Company will, pursuant to reasonable procedures developed in good faith, retain copies of each Issuer
Free Writing Prospectus that is not filed with the Commission in accordance with Rule 433 under the Securities Act.
5. Certain Agreements of
the Underwriters. Each Underwriter hereby represents and agrees that
(a) It has not and will not use, authorize use of, refer to, or
participate in the planning for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act (which term includes use of any written information furnished to the Commission by the Company and not incorporated by
reference into the Registration Statement and any press release issued by the Company) other than (i) a free writing prospectus that, solely as a result of use by such underwriter, would not trigger an obligation to file such free writing
prospectus with the Commission pursuant to Rule 433, (ii) any Issuer Free Writing Prospectus listed on Annex A or prepared pursuant to Section 3(c) or Section 4(c) above (including any electronic road show), or (iii) any free
writing prospectus prepared by such underwriter and approved by the Company in
16
advance in writing (each such free writing prospectus referred to in clauses (i) or (iii), an “Underwriter Free Writing Prospectus”). Notwithstanding the foregoing, the
Underwriters may use a term sheet substantially in the form of Annex B hereto without the consent of the Company.
(b) It is not subject
to any pending proceeding under Section 8A of the Securities Act with respect to the offering (and will promptly notify the Company if any such proceeding against it is initiated during the Prospectus Delivery Period).
6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to purchase Securities on the Closing Date as provided herein is
subject to the performance by the Company of its covenants and other obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall be in
effect, and no proceeding for such purpose, pursuant to Rule 401(g)(2) or pursuant to Section 8A under the Securities Act shall be pending before or threatened by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have
been timely filed with the Commission under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the extent required by Rule 433 under the Securities Act) and in accordance with Section 4(a) hereof; and all requests by the
Commission for additional information shall have been complied with to the reasonable satisfaction of the Representatives.
(b) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct
on the date hereof and on and as of the Closing Date; and the statements of the Company and its officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date.
(c) No Downgrade. Subsequent to the earlier of (A) the Time of Sale and (B) the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded the Securities or any other debt securities or preferred stock of or guaranteed by the Company by any “nationally recognized statistical rating organization”, as
such term is defined by the Commission in Section 3 of the Exchange Act and (ii) no such organization shall have publicly announced that it has under surveillance or review, or has changed its outlook with respect to, its rating of the
Securities or of any other debt securities or preferred stock of or guaranteed by the Company (other than an announcement with positive implications of a possible upgrading).
(d) No Material Adverse Change. No event or condition of a type described in Sections 3(i) or 3(j) hereof shall have occurred or shall
exist, which event or condition is not described in the Time of Sale Information (excluding any amendment or supplement thereto) and the Prospectus (excluding any amendment or supplement thereto) and the effect of which in the reasonable judgment of
the Representatives makes it
17
impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the
Prospectus.
(e) Officer’s Certificate. The Representatives shall have received on and as of the Closing Date a
certificate of an executive officer of the Company who has specific knowledge of the Company’s financial matters and is satisfactory to the Representatives (i) confirming that such officer has reviewed the Registration Statement, the Time
of Sale Information and the Prospectus and, to the knowledge of such officer, the representations set forth in Sections 3(b) or 3(d) hereof are true and correct, (ii) confirming that the other representations and warranties of the Company in
this Agreement are true and correct and that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date and (iii) to the effect set forth in
paragraphs (a), (c) and (d) above.
(f) Comfort Letters of Deloitte & Touche LLP. On the date of this
Agreement and on the Closing Date, Deloitte & Touche LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representatives, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain
financial information of the Company and its subsidiaries contained or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus; provided that the letter delivered on the Closing Date shall use
a “cut-off” date no more than three business days prior to the Closing Date.
(g) Comfort Letters of PwC Polska
sp z.o.o. On the date of this Agreement and on the Closing Date PwC Polska sp z.o.o. shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery thereof and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Representatives, containing statements and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial
statements and certain financial information of N-Vision and its subsidiaries contained or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus; provided that the letter delivered on the
Closing Date shall use a “cut-off” date no more than three business days prior to the Closing Date.
(h)
Opinions and 10b-5 Statement of Counsel for the Company. Latham & Watkins, LLP, counsel for the Company, shall have furnished to the Representatives, at the request of the Company, their written opinion and 10b-5 Statement, dated the
Closing Date and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives.
(i)
Opinions of Ohio Counsel for the Company. Thompson Hine LLP, Ohio counsel for the Company, shall have furnished to the Representatives, at the request of
18
the Company, their written opinion, dated the Closing Date and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives.
(j) Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representatives shall have received on and as of the
Closing Date an opinion and 10b-5 Statement of Simpson Thacher & Bartlett LLP, counsel for the Underwriters, with respect to such matters as the Representatives may reasonably request, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such matters.
(k) No Legal Impediment to
Issuance. No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the
issuance or sale of the Securities; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent the issuance or sale of the Securities.
(l) Good Standing. The Representatives shall have received on and as of the Closing Date satisfactory evidence of the good
standing of the Company and its significant subsidiaries in their respective jurisdictions of organization and their good standing in such other jurisdictions as the Representatives may reasonably request, in each case in writing or any standard
form of telecommunication from the appropriate governmental authorities of such jurisdictions.
(m) Additional
Documents. On or prior to the Closing Date, the Company shall have furnished to the Representatives such further certificates and documents as the Representatives may reasonably request.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its affiliates,
directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, reasonable and documented legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of,
or are based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing
19
Prospectus or any Time of Sale Information, or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Company, its directors, its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the
indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon
and in conformity with any information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, the Prospectus (or any amendment or supplement
thereto), any Issuer Free Writing Prospectus or any Time of Sale Information, it being understood and agreed that the only such information consists of the following: the second and third sentences of the third paragraph, the third sentence of the
sixth paragraph and the seventh paragraph under the caption “Underwriting”.
(c) Notice and Procedures. If any
suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or
(b) above, such person (the “Indemnified Person”) shall promptly notify the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have under this Section 7 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and
provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 7. If any such proceeding shall be brought
or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the
Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 7 that the Indemnifying Person may designate in such proceeding and shall pay the
reasonable and documented fees and expenses of such proceeding and shall pay the fees and expenses of counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to
20
the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for
the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such reasonable and documented fees and expenses shall be reimbursed as they are incurred. Any such separate firm for
any Underwriter, its affiliates, directors and officers and any control persons of such Underwriter shall be designated in writing by the Representatives and any such separate firm for the Company, its directors, its officers who signed the
Registration Statement and any control persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment to the extent such Indemnified Person
would be entitled to be indemnified for such loss or liability under Section 7(a) or Section 7(b) hereof. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such
Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault,
culpability or a failure to act by or on behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for
in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same respective proportions
as the net proceeds (before deducting expenses) received by the Company from the sale of the Securities and the total underwriting discounts and commissions received by the Underwriters in connection therewith, in each case as set
21
forth in the table on the cover of the Prospectus, bear to the aggregate offering price of the Securities. The relative fault of the Company on the one hand and the Underwriters on the other
shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the
Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be required
to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the offering of the Securities exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 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. The Underwriters’ obligations to contribute pursuant to this Section 7 are several in proportion to their respective purchase obligations hereunder
and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.
8. Effectiveness of
Agreement. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.
9. Termination. This Agreement
may be terminated in the absolute discretion of the Representatives, by notice to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially
limited on the New York Stock Exchange or the over-the-counter market; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market; (iii) a general
moratorium on commercial banking activities shall have been declared by federal or New York State authorities; or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or
crisis, either within or outside the United States, that, in the judgment of the Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with the
22
offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the Prospectus.
10. Defaulting Underwriter.
(a) If, on
the Closing Date, any Underwriter defaults on its obligation to purchase the Securities that it has agreed to purchase hereunder, the non-defaulting Underwriters may in their discretion arrange for the purchase of such Securities by other persons
satisfactory to the Company on the terms contained in this Agreement. If, within 36 hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Securities, then the Company shall be
entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Underwriters to purchase such Securities on such terms. If other persons become obligated or agree to purchase the Securities of a
defaulting Underwriter, either the non-defaulting Underwriters or the Company may postpone the Closing Date for up to five full business days in order to effect any changes that in the opinion of counsel for
the Company or counsel for the Underwriters may be necessary in the Registration Statement and the Prospectus or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Registration
Statement and the Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter” includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto
that, pursuant to this Section 10, purchases Securities that a defaulting Underwriter agreed but failed to purchase.
(b) If, after
giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate principal amount of such
Securities that remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Securities
that such Underwriter agreed to purchase hereunder plus such Underwriter’s pro rata share (based on the principal amount of Securities that such Underwriter agreed to purchase hereunder) of the Securities of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement shall terminate without liability on the part of the non-defaulting
Underwriters. Any termination of this Agreement pursuant to this Section 10 shall be without liability on the part of the Company, except that the Company will continue to be liable for the payment of expenses as set forth in Section 11
hereof and except that the provisions of Section 7 hereof shall not terminate and shall remain in effect.
23
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have
to the Company or any non-defaulting Underwriter for damages caused by its default.
11. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company will pay or
cause to be paid all costs and expenses incident to the performance of its obligations hereunder, including without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Securities and any
taxes payable in that connection; (ii) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement, the Preliminary Prospectus, any Issuer Free Writing Prospectus, any Time of Sale
Information and the Prospectus (including all exhibits, amendments and supplements thereto) and the distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents; (iv) the fees and expenses of the
Company’s counsel and independent accountants; (v) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Securities under the laws of such jurisdictions
as the Representatives may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and expenses of counsel for the Underwriters) (provided that the costs under this clause (v) shall not
exceed $7,500 in the aggregate); (vi) any fees charged by rating agencies for rating the Securities; (vii) the fees and expenses of the Trustee and any paying agent (including related fees and expenses of any counsel to such parties); and
(viii) all expenses incurred by the Company in connection with any “road show” presentation to potential investors.
(b) If
(i) this Agreement is terminated pursuant to Section 9, (ii) the Company for any reason fails to tender the Securities for delivery to the Underwriters or (iii) the Underwriters decline to purchase the Securities for any reason
permitted under this Agreement, the Company agrees to reimburse the Underwriters for all out-of-pocket costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Underwriters in connection with this Agreement
and the offering contemplated hereby , except, if this Agreement is terminated pursuant to Section 10, the Company shall not be liable for any costs or expenses to any defaulting Underwriter.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and any controlling persons referred to herein, and the affiliates of each Underwriter referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. No purchaser of Securities from any Underwriter shall be deemed to be a successor merely by reason of such purchase.
13. Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company and the Underwriters
contained in this
24
Agreement or made by or on behalf of the Company or the Underwriters pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company or the Underwriters.
14. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate” has the
meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks are permitted or required to be closed in New York City; (c) the term “subsidiary” has
the meaning set forth in Rule 405 under the Securities Act ; and (d) the term “significant subsidiary” has the meaning set forth in Rule 1-02 of Regulation S-X under the Exchange Act.
15. Miscellaneous.
(a)
Authority of the Representatives. Any action by the Underwriters hereunder may be taken by the Representatives on behalf of the Underwriters, and any such action taken by the Representatives shall be binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted and confirmed by any standard form of telecommunication. Notices to the Underwriters shall be given to the Representatives c/o J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179 (fax: 212-834-6081);
Attention: Investment Grade Syndicate Desk, c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated, 50 Rockefeller Plaza, NY 1-050-12-01, New York, New York, 10020 (fax: 646-855-5958); Attention: High Grade Transaction Management/Legal, c/o
Mitsubishi UFJ Securities (USA), Inc. 1633 Broadway, 29th Floor, New York, New York, 10019 (fax: 646-434-3455); Attention: Capital Markets Group and c/o Wells Fargo Securities, LLC, 550 South
Tryon Street, Charlotte, North Carolina 28202 (fax: 704-410-0326); Attention: Transaction Management Department. Notices to the Company shall be given to it at 9721 Sherrill Blvd., Knoxville, Tennessee 37932, (fax: 513-824-3394); Attention: Office
of the Chief Legal Counsel.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any
departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
25
(f) Headings. The headings herein are included for convenience of reference only
and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.
26
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
|
|
|
| Very truly yours, |
|
| SCRIPPS NETWORKS INTERACTIVE, INC. |
|
|
| By |
|
/s/ Mark Schuermann |
|
|
Name: Mark Scheurmann |
|
|
Title: Senior Vice President and Treasurer |
[Signature Page
– Underwriting Agreement]
|
|
|
| Accepted: May 18, 2015 |
|
| J.P. MORGAN SECURITIES LLC. |
| MERRILL LYNCH, PIERCE, FENNER & SMITH |
| INCORPORATED |
| MITSUBISHI UFJ SECURITIES (USA), INC. |
| WELLS FARGO SECURITIES, LLC |
|
| For themselves and on behalf of the several Underwriters listed in Schedule 1 hereto. |
|
| J.P. Morgan Securities LLC |
|
|
| By |
|
/s/ Som Bhattacharyya |
|
|
Authorized Signatory |
|
| Merrill Lynch, Pierce, Fenner & Smith
Incorporated |
|
|
| By |
|
/s/ Keith Harman |
|
|
Authorized Signatory |
|
| Mitsubishi UFJ Securities (USA), Inc. |
|
|
| By |
|
/s/ Richard Testa |
|
|
Authorized Signatory |
|
| Wells Fargo Securities, LLC |
|
|
| By |
|
/s/ Carolyn Hurley |
|
|
Authorized Signatory |
[Underwriting
Agreement]
Schedule 1
|
|
|
|
|
|
|
|
|
|
|
|
|
| Underwriters |
|
Principal
Amount
of the 2020
Notes |
|
|
Principal
Amount
of the 2022
Notes |
|
|
Principal
Amount
of the 2025
Notes |
|
| J.P. Morgan Securities LLC |
|
$ |
127,600,000 |
|
|
$ |
85,067,000 |
|
|
$ |
106,334,000 |
|
| Merrill Lynch, Pierce, Fenner & Smith
Incorporated |
|
|
127,600,000 |
|
|
|
85,067,000 |
|
|
|
106,333,000 |
|
| Wells Fargo Securities, LLC |
|
|
127,600,000 |
|
|
|
85,066,000 |
|
|
|
106,333,000 |
|
| Mitsubishi UFJ Securities (USA), Inc. |
|
|
96,000,000 |
|
|
|
64,000,000 |
|
|
|
80,000,000 |
|
| KeyBanc Capital Markets Inc. |
|
|
25,800,000 |
|
|
|
17,200,000 |
|
|
|
21,500,000 |
|
| HSBC Securities (USA) Inc. |
|
|
25,800,000 |
|
|
|
17,200,000 |
|
|
|
21,500,000 |
|
| U.S. Bancorp Investments, Inc. |
|
|
25,800,000 |
|
|
|
17,200,000 |
|
|
|
21,500,000 |
|
| Fifth Third Securities, Inc. |
|
|
20,400,000 |
|
|
|
13,600,000 |
|
|
|
17,000,000 |
|
| FTN Financial Securities Corp. |
|
|
13,800,000 |
|
|
|
9,200,000 |
|
|
|
11,500,000 |
|
| SunTrust Robinson Humphrey, Inc. |
|
|
9,600,000 |
|
|
|
6,400,000 |
|
|
|
8,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
600,000,000 |
|
|
$ |
400,000,000 |
|
|
$ |
500,000,000 |
|
Schedule 2
Significant Subsidiaries
1. Scripps
Networks, LLC (Delaware) (100%)
2. Television Food Network, G.P. (Delaware) (69% owned)
3. TCM Sub, LLC (Delaware) (65% owned)
4. Travel Channel, LLC
(Delaware) (65% owned)
5. Scripps Networks International (UK) Limited (100%)
6. Scripps Networks Interactive (Asia) Pte. Ltd. (100%)
Annex A
Time of Sale Information
1. Pricing Term
Sheet dated May 18, 2015.
Annex B
Issuer Free Writing Prospectus, dated May [18], 2015
Filed pursuant to Rule 433 under the Securities Act of 1933
Supplementing the Preliminary Prospectus, dated May [18], 2015
Registration Statement No. 333- 200213
Scripps Networks Interactive, Inc.
Pricing Term Sheet
$600,000,000 2.800% Senior Notes due 2020
$400,000,000 3.500% Senior Notes due 2022
$500,000,000 3.950% Senior Notes due 2025
|
|
|
|
|
| Issuer: |
|
|
|
Scripps Networks Interactive, Inc. |
| Ratings (Moody’s/S&P/Fitch)*: |
|
|
|
[Intentionally omitted] |
| Trade Date: |
|
|
|
May 18, 2015 |
| Settlement Date: |
|
|
|
June 2, 2015 (T+10). Since trades in the secondary market generally settle in three business days, purchasers who wish to trade notes on the date hereof or the next six succeeding business days will be required, by virtue of the
fact that the notes initially settle in T+10, to specify alternative settlement arrangements to prevent a failed settlement. |
| Interest Payment Dates: |
|
|
|
June 15 and December 15, commencing December 15, 2015 |
| Joint Book-Running Managers: |
|
|
|
J.P. Morgan Securities LLC Merrill Lynch,
Pierce, Fenner & Smith Incorporated
Mitsubishi UFJ Securities (USA), Inc. Wells Fargo Securities,
LLC |
| Co-Managers: |
|
|
|
KeyBanc Capital Markets Inc. U.S. Bancorp
Investments, Inc. HSBC Securities (USA) Inc. Fifth Third
Securities, Inc. FTN Financial Securities Corp. SunTrust
Robinson Humphrey, Inc. |
|
|
|
| Security: |
|
|
|
2.800% Senior Notes due 2020 |
| Principal Amount: |
|
|
|
$600,000,000 |
| Maturity: |
|
|
|
June 15, 2020 |
| Coupon (Interest Rate): |
|
|
|
2.800% |
| Price to Public: |
|
|
|
99.659% of principal amount |
| Benchmark Treasury: |
|
|
|
1.375% due April 30, 2020 |
| Benchmark Treasury Price / Yield: |
|
|
|
99-09+ / 1.523% |
| Spread to Benchmark Treasury: |
|
|
|
+135 basis points |
| Yield to maturity: |
|
|
|
2.873% |
| Optional Redemption: |
|
|
|
At any time prior to May 15, 2020 (one month prior to maturity) at a discount rate of Treasury plus 20 basis points; par call at any time on or after May 15, 2020 |
| Special Mandatory Redemption: |
|
|
|
If the Issuer does not consummate the N-Vision Acquisition (as defined in the Preliminary |
|
|
|
|
|
|
|
|
|
Prospectus Supplement) on or prior to December 31, 2015, or the Acquisition Agreement (as defined in the Preliminary Prospectus Supplement) is terminated any time prior to such date, Issuer will be required to redeem the
outstanding notes at a redemption price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest, if any, to, but excluding, the date of such special mandatory redemption. |
| CUSIP / ISIN: |
|
|
|
811065 AE1 / US811065AE14 |
|
|
|
| Security: |
|
|
|
3.500% Senior Notes due 2022 |
| Principal Amount: |
|
|
|
$400,000,000 |
| Maturity: |
|
|
|
June 15, 2022 |
| Coupon (Interest Rate): |
|
|
|
3.500% |
| Price to Public: |
|
|
|
99.690% of principal amount |
| Benchmark Treasury: |
|
|
|
1.750% due April 30, 2022 |
| Benchmark Treasury Price / Yield: |
|
|
|
98-22+ / 1.950% |
| Spread to Benchmark Treasury: |
|
|
|
+160 basis points |
| Yield to maturity: |
|
|
|
3.550% |
| Optional Redemption: |
|
|
|
At any time prior to April 15, 2022 (two months prior to maturity) at a discount rate of Treasury plus 25 basis points; par call at any time on or after April 15, 2022 |
| Special Mandatory Redemption: |
|
|
|
If the Issuer does not consummate the N-Vision Acquisition (as defined in the Preliminary Prospectus Supplement) on or prior to December 31, 2015, or the Acquisition Agreement (as defined in the Preliminary Prospectus Supplement)
is terminated any time prior to such date, Issuer will be required to redeem the outstanding notes at a redemption price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest, if any, to, but excluding, the
date of such special mandatory redemption. |
| CUSIP / ISIN: |
|
|
|
811065 AF8 / US811065AF88 |
|
|
|
| Security: |
|
|
|
3.950% Senior Notes due 2025 |
| Principal Amount: |
|
|
|
$500,000,000 |
| Maturity: |
|
|
|
June 15, 2025 |
| Coupon (Interest Rate): |
|
|
|
3.950% |
| Price to Public: |
|
|
|
99.810% of principal amount |
| Benchmark Treasury: |
|
|
|
2.125% due May 15, 2025 |
| Benchmark Treasury Price / Yield: |
|
|
|
99-04 / 2.223% |
| Spread to Benchmark Treasury: |
|
|
|
+175 basis points |
| Yield to maturity: |
|
|
|
3.973% |
| Optional Redemption: |
|
|
|
At any time prior to March 15, 2025 (three months prior to maturity) at a discount rate of Treasury plus 30 basis points; par call at any time on or after March 15, 2025 |
| Special Mandatory Redemption: |
|
|
|
If the Issuer does not consummate the N-Vision Acquisition (as defined in the Preliminary Prospectus Supplement) on or prior to December 31, 2015, or the Acquisition Agreement (as defined in the Preliminary Prospectus Supplement)
is terminated any time prior to such date, Issuer will |
|
|
|
|
|
|
|
|
|
be required to redeem the outstanding notes at a redemption price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest, if any, to, but excluding, the date of such special mandatory
redemption. |
| CUSIP / ISIN: |
|
|
|
811065 AG6 / US811065AG61 |
| * |
An explanation of the significance of ratings may be obtained from the rating agencies. Generally, rating agencies base their ratings on such material and information, and such of their own investigations, studies and
assumptions, as they deem appropriate. The rating of the notes should be evaluated independently from similar ratings of other securities. A credit rating of a security is not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the assigning rating agency. |
The issuer has filed a registration statement (including a
prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about
the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus
if you request it by calling J.P. Morgan Securities LLC collect at 1-212-834-4533, Merrill Lynch, Pierce, Fenner & Smith Incorporated toll-free at 1-800-294-1322, Mitsubishi UFJ Securities (USA), Inc. toll-free at 1-877-649-6848 or Wells
Fargo Securities, LLC toll-free at 1-800-645-3751.
Exhibit 4.1
EXECUTION VERSION
SCRIPPS NETWORKS INTERACTIVE, INC.
Company
and
U.S. BANK NATIONAL ASSOCIATION,
Trustee
THIRD
SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 2, 2015
TO
INDENTURE
DATED AS OF DECEMBER 1, 2011
Relating To
2.800%
Senior Notes due 2020
3.500% Senior Notes due 2022
3.950% Senior Notes due 2025
TABLE OF CONTENTS
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DEFINITIONS |
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| ARTICLE 2 |
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GENERAL TERMS AND CONDITIONS OF THE NOTES |
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3 |
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| 2.01 |
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Designation and Principal Amount |
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| 2.02 |
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Maturity |
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| 2.03 |
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Form and Payment |
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| 2.04 |
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Interest |
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| 2.05 |
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Other Terms |
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| ARTICLE 3 |
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ADDITIONAL COVENANTS |
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| 3.01 |
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Restrictions on Secured Debt |
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| 3.02 |
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Restrictions on Sale and Lease-Back Transactions |
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| 3.03 |
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Consolidation, Merger and Sale of Assets |
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| ARTICLE 4 |
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REDEMPTION OF THE NOTES |
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| 4.01 |
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Optional Redemption |
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| 4.02 |
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Purchase of Notes Upon a Change of Control Triggering Event |
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| 4.03 |
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Special Mandatory Redemption |
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| ARTICLE 5 |
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MISCELLANEOUS |
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| 5.01 |
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Covenant Defeasance |
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| 5.02 |
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Form of Notes |
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| 5.03 |
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Ratification of Base Indenture |
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| 5.04 |
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Trust Indenture Act Controls |
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Conflict with Indenture |
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Governing Law |
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Successors |
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Counterparts |
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16 |
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| 5.09 |
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Trustee Disclaimer |
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i
THIRD SUPPLEMENTAL INDENTURE
THIRD SUPPLEMENTAL INDENTURE, dated as of June 2, 2015 between Scripps Networks Interactive, Inc., an Ohio corporation (the
“Company”), and U.S. Bank National Association, as Trustee (the “Trustee”) to the Indenture dated as of December 1, 2011, between the Company and the Trustee (the “Base Indenture”), as
supplemented by a first supplemental indenture, dated as of December 1, 2011, (the “First Supplemental Indenture”) and the second supplemental indenture, dated as of November 24, 2014 (“Second Supplemental
Indenture”) and as further supplemented by this third supplemental indenture (the “Third Supplemental Indenture,” and together with the First Supplemental Indenture, the Second Supplemental Indenture and the Base Indenture,
the “Indenture”)
R E C I T A L S
WHEREAS, the Company has executed and delivered to the Trustee the Indenture providing for the issuance from time to time of its Notes;
WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the establishment of three new series of
its Notes to be known as its 2.800% Senior Notes due 2020 (the “2020 Notes”), its 3.500% Senior Notes due 2022 (the “2022 Notes”) and its 3.950% Senior Notes due 2025 (the “2025 Notes” and together
with the 2020 Notes and 2022 Notes, the “Notes”), the form and substance of such Notes and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture and this Supplemental Indenture;
WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental Indenture, and all requirements necessary to
make this Supplemental Indenture a valid instrument in accordance with its terms, and to make the Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid and legally binding obligations of the Company, and all
acts and things necessary have been done and performed to make this Supplemental Indenture enforceable in accordance with its terms, and the execution and delivery of this Supplemental Indenture has been duly authorized in all respects.
W I T N E S S E T H:
NOW, THEREFORE, for and in consideration of the premises contained herein, each party agrees for the benefit of each other party and
for the equal and ratable benefit of the Holders of the Notes, as follows:
ARTICLE 1
DEFINITIONS
1.01
Capitalized terms used but not defined in this Supplemental Indenture shall have the meanings ascribed to them in the Base Indenture.
1.02 References in this Supplemental Indenture to article and section numbers shall be deemed to
be references to article and section numbers of this Supplemental Indenture unless otherwise specified.
1.03 For purposes of this
Supplemental Indenture, the following terms have the meanings ascribed to them as follows:
“Attributable Debt”, in
respect of a Sale and Lease-Back Transaction, means, as of any particular time, the present value (discounted at the rate of interest implicit in the terms of the lease involved in such Sale and Lease-Back Transaction, as determined in good faith by
the Company) of the obligation of the lessee thereunder for rental payments (excluding, however, any amounts required to be paid by such lessee, whether or not designated as rent or additional rent, on account of maintenance and repairs, insurance,
taxes, assessments, water rates or similar charges or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, insurance, taxes, assessments, water rates or similar charges) during the
remaining term of such lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended).
“Consolidated Net Tangible Assets” means, as of any particular time, the total amount of assets (less applicable reserves)
after deducting therefrom (a) all current liabilities (excluding any thereof which are by their terms extendible or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is
being computed and excluding current maturities of long-term indebtedness), and (b) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangible assets, all as shown in the consolidated balance
sheet of the Company and Subsidiaries, as of the most recently ended fiscal quarter for which financial statements are available computed in accordance with GAAP.
“Consolidated Shareholders’ Equity” means the Company’s total shareholders’ equity as shown in the
Company’s consolidated balance sheet as of the most recently ended fiscal quarter for which financial statements are available computed in accordance with GAAP.
“Base Indenture” has the meaning provided in the recitals.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Family Agreement” means the Scripps Family Agreement, dated October 15, 1992, as amended to the date hereof and as it
may be amended from time to time after the date hereof.
“GAAP” means generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
“Indenture” has the meaning provided in the recitals.
“Interest Payment Date” has the meaning provided in Section 2.04.
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“Notes” has the meaning provided in the recitals.
“Paying Agent” has the meaning provided in Section 2.03(d).
“Principal Property” means any real property interest (all such interests forming an integral part of a single development or
operation being considered as one interest) located within the United States of America and owned by the Company or any of the Company’s Restricted Subsidiaries and having a gross book value in excess of 1% of Consolidated Net Tangible Assets
of the Company at the time of determination thereof, other than any such interest or portion of such interest which, in the opinion of the Board of Directors of the Company, is not material to the total business conducted by the Company and the
Company’s Restricted Subsidiaries considered as one enterprise.
“Restricted Subsidiary” any Subsidiary of the
Company (a) substantially all of the property of which is located, or substantially all of the business of which is carried on, within the United States of America and (b) which owns a Principal Property; provided, that any Subsidiary of
the Company which is principally engaged in financing operations outside the United States of America or which is principally engaged in leasing or financing installment receivables shall not be deemed a Restricted Subsidiary for purposes of this
Indenture.
“Supplemental Indenture” has the meaning provided in the preamble.
“Trustee” has the meaning provided in the recitals.
“United States” or “U.S.” means the United States of America, its territories and possessions, any state of
the United States, and the District of Columbia.
ARTICLE 2
GENERAL TERMS AND CONDITIONS OF THE NOTES
2.01 Designation and Principal Amount.
(a) The Notes are hereby authorized and are designated the “2.800% Notes due 2020,” the “3.500% Notes due
2022” and the “3.950% Notes due 2025,” unlimited in aggregate principal amount. The 2.800% Notes due 2020 issued on the date hereof pursuant to the terms of this Indenture shall be in an aggregate principal amount of $600,000,000, the
3.500% Notes due 2022 issued on the date hereof pursuant to the terms of this Indenture shall be in an aggregate principal amount of $400,000,000 and the 3.950% Notes due 2025 issued on the date hereof, pursuant to the terms of this Indenture shall
be in the aggregate principal amount of $500,000,000, of which amounts shall be set forth in the written order of the Company for the authentication and delivery of the Notes pursuant to Section 2.04 of the Base Indenture.
(b) The Company may, from time to time, without notice to or the consent of the Holders of either the 2020 Notes, 2022 Notes or
the 2025 Notes, create and issue additional 2020 Notes, 2022 Notes or 2025 Notes ranking equally and ratably with such series of Notes issued on the date hereof in all respects (or in all respects except for the payment of interest accruing prior to
the issue date of such additional Notes or except for
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the first payment of interest following the issue date of such additional Notes), so that such additional 2020 Notes, 2022 Notes or 2025 Notes shall be consolidated and form a single series with
such series of Notes issued on the date hereof and shall have the same terms as to status, redemption or otherwise as such series of Notes issued on the date hereof.
2.02 Maturity. The principal amount of the 2020 Notes shall be payable on June 15, 2020, the principal amount of the 2022
Notes shall be payable on June 15, 2022 and the principal amount of the 2025 Notes shall be payable on June 15, 2025.
2.03
Form and Payment.
(a) The Notes shall be issued as global notes, only in fully registered book-entry form, without coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof.
(b) Principal, premium, if any, and/or interest, if any, on the global notes representing the Notes shall be made to the Paying
Agent (defined below) which in turn shall make payment to The Depository Trust Company as the Depositary with respect to the Notes or its nominee.
(c) The global notes representing the Notes shall be deposited with, or on behalf of, the Depositary and shall be registered,
at the request of the Depositary, in the name of Cede & Co.
(d) U.S. Bank National Association shall act as
paying agent for the Notes (the “Paying Agent”). The Company may appoint and change the Paying Agent without prior notice to the Holders.
2.04 Interest. Interest on the 2020 Notes shall accrue at the rate of 2.800% per annum, interest on the 2022 Notes shall
accrue at the rate of 3.500% per annum and interest on the 2025 Notes shall accrue at the rate of 3.950% per annum. Interest on the Notes shall be payable semiannually in arrears on June 15 and December 15, commencing on
December 15, 2015 (each an “Interest Payment Date”), to the Holders in whose names the Notes are registered at the close of business on June 1 and December 1 immediately preceding such Interest Payment Date. Interest
on the Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day months. If any Interest Payment Date is not a Business Day, then the related
payment of interest for such Interest Payment Date shall be paid on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date and no further interest shall accrue as a result of such delay.
2.05 Other Terms. The Notes shall be unsecured senior indebtedness of the Company and shall rank equally and ratably in right of
payment with all of the Company’s other unsecured and unsubordinated indebtedness outstanding from time to time. The Notes shall not be convertible into, or exchangeable for, any other securities of the Company, except that the Notes shall be
exchangeable for other Notes to the extent provided for in the Base Indenture.
ARTICLE 3
ADDITIONAL COVENANTS
3.01 Restrictions on Secured Debt.
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(a) The Company shall not, nor shall it permit any of its Restricted Subsidiaries
to, create, incur, issue, assume or guarantee any indebtedness for borrowed money (hereinafter referred to as “indebtedness”) secured by a mortgage, security interest, pledge or lien (hereinafter referred to as
“mortgage”) of or upon any Principal Property or on any shares of capital stock or indebtedness of any Restricted Subsidiary (whether such Principal Property, shares of capital stock or indebtedness is owned at the date hereof or
acquired after the date hereof) without in any such case making or causing to be made effective provision (and the Company covenants that in any such case it shall make or cause to be made effective provision) whereby the Notes (together with, if
the Company shall so determine, any other indebtedness created, incurred, issued, assumed or guaranteed by the Company or any Restricted Subsidiary then existing or thereafter created) shall be secured equally and ratably with (or, at the option of
the Company, prior to) such indebtedness, until such time as such indebtedness shall no longer be secured.
(b) The
provisions of paragraph (a) of this Section shall not, however, apply to any indebtedness secured by any one or more of the following:
(i) mortgages of or upon any property acquired, constructed or improved by, or of or upon any shares of capital stock or
indebtedness acquired by, the Company or any Restricted Subsidiary after the date of this Indenture to secure indebtedness incurred for the purpose of financing or refinancing all or any part of the purchase price of such property, shares of capital
stock or indebtedness or of the cost of any construction or improvements on such properties, in each case, to the extent that the indebtedness is incurred prior to or within 180 days after the applicable acquisition, completion of construction or
beginning of commercial operation of such property, as the case may be;
(ii) mortgages of or upon any property, shares of
capital stock or indebtedness existing at the time of acquisition thereof by the Company or any Restricted Subsidiary;
(iii) mortgages of or upon any property of a Person existing at the time such Person is merged with or into or consolidated
with the Company or any Restricted Subsidiary or existing at the time of a sale or transfer of all or substantially all of the properties of such Person to the Company or any Restricted Subsidiary;
(iv) mortgages of or upon any property of, or shares of capital stock or indebtedness of, a Person existing at the time such
Person becomes a Restricted Subsidiary;
(v) mortgages to secure indebtedness of any Restricted Subsidiary to the Company
or to another Restricted Subsidiary;
(vi) mortgages in favor of the United States of America or any State thereof, or any
department, agency or instrumentality or political subdivision of the United States of America or any State thereof or the District of Columbia, or in favor of any other country or political subdivision, to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of financing or refinancing
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all or any part of the purchase price of the property, shares of capital stock or indebtedness subject to such mortgages, or the cost of constructing or improving the property subject to such
mortgages; and
(vii) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole
or in part of any mortgage existing at the date of this Indenture or any mortgage referred to in the foregoing clauses (i) through (vi), inclusive; provided, that the principal amount of indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time of such extension, renewal or replacement (plus all accrued interest on the indebtedness and the amount of all fees and expenses, including premiums, incurred in connection with such extension,
renewal or replacement), and that such extension, renewal or replacement shall be limited to all or a part of the property (plus improvements and construction on such property), shares of capital stock or indebtedness which was subject to the
mortgage so extended, renewed or replaced.
(c) Notwithstanding the provisions of paragraph (a) of this
Section 3.01, the Company or any Restricted Subsidiary may, without equally and ratably securing the Notes, create, incur, issue, assume or guarantee indebtedness secured by a mortgage not excepted by clauses (i) through (vii) of
paragraph (b) of this Section 3.01, if the aggregate amount of such indebtedness, together with (x) all other indebtedness of, or indebtedness guaranteed by, the Company and its Restricted Subsidiaries existing at such time and
secured by mortgages not so excepted, and (y) Attributable Debt in respect of Sale and Lease-Back Transactions with respect to any Principal Property existing at such time (other than Sale and Lease-Back Transactions permitted by clause
(i) of Section 3.02 and other than Sale and Lease-Back Transactions the proceeds of which have been applied in accordance with clause (iii) of Section 3.02), does not at the time exceed 15% of Consolidated Shareholders’
Equity.
3.02 Restrictions on Sale and Lease-Back Transactions.
The Company will not, and will not permit any of the Restricted Subsidiaries to, enter into any arrangement with any Person providing for the
leasing by the Company or any of the Restricted Subsidiaries of any Principal Property, whether owned at or acquired after the date of the Indenture (except for temporary leases for a term, including any renewal thereof, of not more than three years
and except for leases between the Company and any Restricted Subsidiary, or between Restricted Subsidiaries), which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person with the intention of
taking back a lease of such property (herein referred to as a “Sale and Lease-Back Transaction”) unless (i) the Company or such Restricted Subsidiary would (at the time of entering into such arrangement) be entitled, pursuant
to clause (i) or (vi) of Section 3.01(b), without equally and ratably securing the Notes, to create, issue, assume or guarantee indebtedness secured by a mortgage on such property, (ii) the Company or such Restricted Subsidiary
would (at the time of entering into such arrangement) be entitled pursuant to Section 3.01(c), without equally and ratably securing the Notes, to create, issue, assume or guarantee indebtedness secured by a mortgage on such property in an
amount at least equal to the Attributable Debt in respect of such Sale and Lease-Back Transaction or (iii) the Company or such Restricted Subsidiary shall apply, within 180 days of the effective date of such arrangement, an amount not less than
the greater of (x) the net
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proceeds of the sale of such property or (y) the fair market value (as determined by the Board of Directors of the Company) of such property to either the prepayment or retirement (other
than any mandatory prepayment or retirement) of indebtedness incurred or assumed by the Company or any Restricted Subsidiary (other than indebtedness owned by the Company or any Restricted Subsidiary) which by its terms matures at or is extendible
or renewable at the option of the obligor to a date more than twelve months after the date of the creation of such indebtedness, or to the acquisition, construction or improvement of a real property interest which is, or upon such acquisition,
construction or improvement will be, a Principal Property.
3.03 Consolidation, Merger and Sale of Assets. If, upon any
consolidation or merger, or upon any lease, sale or transfer of all or substantially all of the Company’s assets as provided in Section 9.01 of the Base Indenture, any Principal Property or any shares of capital stock or indebtedness of
any Restricted Subsidiary, owned immediately prior to the transaction, would thereupon become subject to any mortgage, security interest, pledge or lien securing any indebtedness for borrowed money of, or guaranteed by, such other Person (other than
any mortgage permitted as described in Section 3.01 hereof), the Company, prior to such consolidation, merger, lease, sale or transfer, shall, by executing and delivering to the Trustee a supplemental indenture, secure the due and punctual
payment of the principal of, and any premium and interest on, the Notes (together with, if the Company decides, any other indebtedness of, or guaranteed by, the Company or any of its Restricted Subsidiaries then existing or thereafter created)
equally and ratably with (or, at the Company’s, prior to) the indebtedness secured by such mortgage.
ARTICLE 4
REDEMPTION OF THE NOTES
4.01 Optional Redemption.
(a) The 2020 Notes shall be redeemable, in whole at any time or in part, from time to time, prior to May 15, 2020 (the
date that is one month prior to the maturity date of the 2020 Notes), the 2022 Notes shall be redeemable, in whole at any time or in part, from time to time, prior to April 15, 2022 (the date that is two months prior to the maturity date of the
2022 Notes) and the 2025 Notes shall be redeemable in whole at any time or in part, from time to time, prior to March 15, 2025 (the date that is three months prior to the maturity date of the 2025 Notes) at a redemption price equal to the
greater of:
(i) 100% of the principal amount of the Notes of such series to be redeemed, and
(ii) as determined by the Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments
of principal and interest on the Notes of such series to be redeemed (not including any portion of such payments of interest accrued as of the date of redemption) discounted to the date of redemption (the “Redemption Date”) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined below) plus 20
basis points in the case of the 2020 Notes, 25 basis points in the case of the 2022 Notes or 30 basis points in the case of the 2025
7
Notes, plus accrued and unpaid interest thereon to, but not including, the Redemption Date.
(b) If the 2020 Notes are redeemed on or after May 15, 2020 (the date that is one month prior to their maturity date), the
2022 Notes are redeemed on or after April 15, 2022 (the date that is two months prior to their maturity date) or the 2025 notes are redeemed on or after March 15, 2025 (the date that is three months prior to their maturity date), such
notes will be redeemed at a redemption price equal to 100% of the principal amount of the notes to be redeemed plus, in each case, accrued and unpaid interest to the Redemption Date.
(c) If the Company elects to redeem Notes of any series pursuant to the optional redemption provisions of Section 4.01(a)
or (b) hereof, at least 30 days prior to the redemption date (unless a shorter notice shall be agreed to in writing by the Trustee) but not more than 60 days before the Redemption Date, the Company shall furnish to the Trustee an Officers’
Certificate setting forth (i) the applicable section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of 2020 Notes, 2022 Notes and/or 2025 Notes to be redeemed and
(iv) the redemption price.
(d) If less than all of the 2020 Notes, 2022 Notes or 2025 Notes are to be redeemed, the
Trustee shall select the Notes of the applicable series to be redeemed on a pro rata basis or on as nearly a pro rata basis as is practicable. The Trustee shall promptly notify in writing the Company of the Notes selected for redemption and, in the
case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $2,000 or integral multiples of $1,000 in excess thereof, except that if all of the Notes of
a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not an integral multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes
called for redemption also apply to portions of Notes called for redemption.
(e) In the case of any redemption other than
a redemption pursuant to Section 4.03, at least 30 days but no more than 60 days before the redemption date, the Company shall mail, or cause to be mailed, a notice of redemption by first-class mail to each Holder of Notes to be redeemed
at such Holder’s registered address appearing on the register. The notice shall identify the Notes to be redeemed (including the CUSIP and/or ISIN numbers thereof, if any) and shall state:
(i) the Redemption Date;
(ii) the principal amount of the Notes that are being redeemed;
(iii) the appropriate calculation of the redemption price, but need not include the actual redemption price; the actual
redemption price shall be set forth in an Officers’ Certificate delivered to the Trustee no later than two Business Days prior to the redemption date;
(iv) if fewer than all outstanding Notes are to be redeemed, the portion of the principal amount of such Notes to be redeemed
and that, after the
8
Redemption Date and upon surrender of such Notes, if applicable, a new Note or Notes in principal amount equal to the unredeemed portion will be issued;
(v) the name and address of the Paying Agent;
(vi) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(vii) that unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date;
(viii) if such notice is conditioned upon the occurrence of one or more
conditions precedent, the nature of such conditions precedent;
(ix) the applicable section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
(x) that no representation is made as to the correctness or
accuracy of the CUSIP and/or ISIN numbers, if any, listed in such notice or printed on the Notes.
The Company may state in the notice of
redemption that payment of the redemption price and performance of its obligations with respect to redemption or purchase may be performed by another Person.
(f) At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its
expense; provided, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers’ Certificate requesting that the Trustee give such notice and attaching a copy of such notice, which shall set
forth the information to be stated in such notice as provided in this Section 4.01(e).
(g) For purposes of this
Section 4.01, the following definitions are applicable:
“Adjusted Treasury Rate” means, with respect to any
redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue (as defined below), assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price (as defined below) for that redemption date.
“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity
comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes.
“Comparable Treasury Price” means, with respect to any Redemption Date, (i) the
average of the Reference Treasury Dealer Quotations (as defined below) for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Quotation Agent obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such quotations.
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“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.
“Reference Treasury Dealer” means each of (1) J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and a Primary Treasury Dealer (as defined below) selected by Wells Fargo Securities, LLC, and their respective successors and (2) any two other primary U.S. government securities dealer selected by the Company; provided that
if any of the foregoing shall cease to be a primary U.S. government securities dealer in New York City (each, a “Primary Treasury Dealer”), the Company will substitute another Primary Treasury Dealer for any of the foregoing.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the
average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer
at 3:30 p.m., New York City time, on the third Business Day preceding such Redemption Date.
4.02 Purchase of Notes Upon a
Change of Control Triggering Event.
(a) If a Change of Control Triggering Event with respect to the Notes occurs,
unless the Company has exercised its right to redeem the Notes in full, pursuant to Section 4.01, Holders of Notes shall have the right to require the Company to repurchase all or a portion (equal to $2,000 or an integral multiple of $1,000 in
excess thereof) of such Notes held by the Holders pursuant to the offer described in (b) below (such offer, the “Change of Control Offer”) on the terms set forth in this Section 4.02. In the Change of Control Offer, the
Company shall offer payment in cash equal to 101% of the principal amount of Notes repurchased plus accrued and unpaid interest, if any, to the date of repurchase (the “Change of Control Payment”), subject to the rights of Holders
of such Notes on the relevant record date to receive interest due on the relevant Interest Payment Date.
(b) Within 30
days following the applicable 60 day period referenced in the definition of the term “Below Investment Grade Rating Event” (as such period may be extended as provided in such definition) with respect to the Notes, or at the Company’s
option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company shall be required to send, by first class mail, a notice to Holders of Notes, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. Such notice shall, among other things, describe the transaction or transactions that constitute the Change of Control Triggering events and state the repurchase date, which must be no earlier than 30
days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the “Change of Control Payment Date”). The notice, if mailed prior to the date of consummation of the Change of Control, shall
state that the Change of Control Offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date. Holders of Notes electing to have Notes repurchased pursuant to a Change of Control Offer shall be
required to surrender their Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice, or transfer their Notes to the Paying Agent
by
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book-entry transfer pursuant to the applicable procedures of the Paying Agent, prior to the close of business on the third Business Day prior to the Change
of Control Payment Date.
(c) On or prior to the Change of Control Payment Date, the Company shall, to the extent lawful:
(i) accept for payment all Notes or portions of Notes properly tendered and not withdrawn pursuant to the Change of
Control Offer;
(ii) deposit with the Payment Agent funds in an amount equal to the purchase price of the Notes set forth
in Section 4.02(a) (the “Purchase Price”) in respect of all Notes or portions of Notes properly tendered; and
(iii) deliver or cause to be delivered to the Trustee the Notes properly tendered and not withdrawn together with an
Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company, and that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this
Section 4.02.
(d) The Company shall not be required to make a Change of Control Offer if (i) a third party makes
such an offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to such an offer made by the Company, and such third party purchases all Notes properly tendered and not withdrawn
under its offer, or (ii) the Company has exercised its right to redeem the Notes under Section 4.01 and has given notice of redemption in accordance with the provisions of Section 4.01, unless and until there is a default in payment
of the applicable redemption price
(e) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of
Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Company shall comply with those securities laws and regulations and shall
not be deemed to have breached its obligations under the provisions in the Indenture governing the Change of Control Offer by virtue of any such conflict.
(f) For purposes of this Section 4.02, the following definitions are applicable:
“Below Investment Grade Rating Event” occurs if both the rating on the Notes is lowered by each of the Rating
Agencies and the Notes are rated below Investment Grade Rating by each of the Rating Agencies on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following
public notice of the occurrence of a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies); provided that a Below
Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for
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purposes of the definition of Change of Control Triggering Event hereunder) if any of the Rating Agencies making the reduction in rating to which this definition would otherwise apply does not
announce or publicly confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of
Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).
“Change of Control” means the occurrence of any one of the following:
(i) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) or
group other than the Company or one or more of its Subsidiaries;
(ii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) or group becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the voting power of the Company’s common equity entitled to vote generally in the election of a majority of directors;
(iii) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors;
(iv) the adoption of a plan relating to the liquidation or dissolution of the Company; or
(v) the consummation of a so-called “going private/Rule 13e-3 Transaction” that results in any of the effects
described in paragraph (a)(3)(ii) of Rule 13e-3 under the Exchange Act (or any successor provision) with respect to our Class A Common Shares, following which the Scripps Family Members beneficially own, directly or indirectly, more than 50% of
the voting power of the Company’s common equity entitled to vote generally in the election of a majority of directors.
For the purpose of this definition, “Family Agreement” means the Scripps Family Agreement, dated October 15,
1992, as it may be amended from time to time and “Scripps Family Members” shall mean the “Future Shareholders,” as such term is defined in the Family Agreement, and their respective heirs, executors, legal representatives,
successors and permitted assigns. Notwithstanding anything to the contrary in this definition, the termination of the Family Agreement, in and of itself, shall not constitute a Change of Control.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment
Grade Rating Event.
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“Continuing Directors” means, as of any date of determination,
any member of the Board of Directors (or equivalent body) of the Company who:
(i) was a member of such board of directors
on the date of the issuance of the Notes; or
(ii) was nominated for election or elected to such Board of Directors with
the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Company’s proxy statement in which such member was
named as a nominee for election as a director, without objection to such nomination); provided, that Continuing Directors will include persons not elected by or recommended for election by the then-incumbent Board of Directors if such Board of
Directors determines reasonably and in good faith that failure to approve any such persons as members of the Board of Directors could reasonably be expected to violate a fiduciary duty under applicable law.
“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s,
BBB- (or the equivalent) by S&P and BBB- (or the equivalent) by Fitch.
“Moody’s” means
Moody’s Investors Service, Inc. and its successors.
“Rating Agencies” means (i) each of
Moody’s and S&P; and (ii) if either Moody’s or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical
rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected by the Company (as certified by a resolution of the Company’s board of directors) as a replacement agency for Moody’s or S&P, or
both of them, as the case may be.
“S&P” means Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its successors.
4.03 Special Mandatory Redemption.
(a) Following the occurrence of a Special Mandatory Redemption Trigger, the Company shall redeem the Notes as a whole, upon
notice as provided herein, at a redemption price equal to 101% of the aggregate principal amount of the Notes plus accrued and unpaid interest to, but excluding, the Special Mandatory Redemption Date. Notwithstanding the provisions of
Section 4.01(e) of the Supplemental Indenture, notice of such mandatory redemption shall be given by first-class mail, postage prepaid, mailed not more than 5 Business Days following the occurrence of the Special Mandatory Redemption Trigger,
to each Holder at such Holder’s address appearing in the security register, with a copy to the Trustee. Any failure to comply with the provisions of this
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Section 4.03 will be an Event of Default.
(b) In the case of
any redemption pursuant to Section 4.03, such notice shall state:
(i) that the Special Mandatory Redemption Trigger
has occurred;
(ii) the Special Mandatory Redemption Date;
(iii) the redemption price and the appropriate calculation of the redemption price;
(iv) that on the Special Mandatory Redemption Date the redemption price will become due and payable upon the Notes to be
redeemed and that interest thereon will cease to accrue on and after such date;
(v) the name and address of the Paying
Agent;
(vi) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(vii) that unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date; and
(x) that no representation is made as to the correctness or accuracy of the
CUSIP and/or ISIN numbers, if any, listed in such notice or printed on the Notes.
The Company may state in the notice of redemption that
payment of the redemption price and performance of its obligations with respect to redemption or purchase may be performed by another Person.
(c) For purposes of this Section 4.03, the following definitions are applicable:
“Acquisition Agreement” means that certain Agreement for the Sale and Purchase of Shares in the Capital of
N-Vision B.V. dated March 14, 2015 among ITI Media Group Limited, Groupe Canal + S.A., Southbank Media Ltd. and Scripps Networks Interactive, Inc.
“Special Mandatory Redemption Date” means the earlier to occur of:
(i) January 30, 2016, if the transactions contemplated by the Acquisition Agreement have not been consummated by
December 31, 2015; or
(ii) the 30th day (or if such day is not
a Business Day, the first Business Day thereafter) following the termination of the Acquisition Agreement.
“Special Mandatory Redemption Trigger” means the earlier to occur of:
(i) December 31, 2015, if the transactions contemplated by the Acquisition Agreement have not been consummated by such
date; or
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(ii) the termination of the Acquisition Agreement.
ARTICLE 5
MISCELLANEOUS
5.01 Defeasance and Covenant Defeasance. Pursuant to Article 10 of the Base Indenture provision is hereby made for both
(i) “defeasance” (as defined in Section 10.04 of the Base Indenture) and (ii) “covenant defeasance” (as defined in Section 10.05 of the Base Indenture) of the Notes, in each case, upon the terms and conditions
contained in Article 10 of the Base Indenture. If the Company effects covenant defeasance pursuant to Article 10 of the Base Indenture, then the Company shall be released from its obligations under Article 3, Section 4.02 and
Section 4.03 of this Supplemental Indenture with respect to the Notes as provided for in Article 10 of the Base Indenture.
5.02
Form of Notes.
(a) The Notes and the Trustee’s certificates of authentication to be endorsed thereon
are to be substantially in the form of Exhibit A, Exhibit B and Exhibit C attached hereto, which form is hereby incorporated in and made a part of this Supplemental Indenture.
(b) The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this
Supplemental Indenture, and the Company and the Trustee, by their execution and delivery of this Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.
5.03 Ratification of Base Indenture. The Base Indenture, as supplemented by this Supplemental Indenture, is in all respects
ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided.
5.04 Trust Indenture Act Controls. If any provision hereof limits, qualifies or conflicts with the duties imposed by
Section 310 through 317 of the Trust Indenture Act of 1939, the imposed duties shall control.
5.05 Conflict with
Indenture. To the extent not expressly amended or modified by this Supplemental Indenture, the Base Indenture shall remain in full force and effect. If any provision of this Supplemental Indenture relating to the Notes is inconsistent with
any provision of the Base Indenture, the provision of this Supplemental Indenture shall control.
5.06 Governing Law. THIS
SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE.
5.07 Successors. All agreements of the Company in the Base Indenture, this Supplemental Indenture and the Notes shall bind its
successors. All agreements of the Trustee in the Base Indenture and this Supplemental Indenture shall bind its successors.
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5.08 Counterparts. This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
5.09 Trustee Disclaimer. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture
other than as to the validity of its execution and delivery by the Trustee. The recitals and statements herein are deemed to be those of the Company and not the Trustee.
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IN WITNESS WHEREOF, the parties hereto have caused the Supplemental Indenture to be duly
executed as of the day and year first above written.
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| SCRIPPS NETWORKS INTERACTIVE, INC. |
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/s/ Mark Schuermann |
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Mark Schuermann |
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Senior Vice President and Treasurer |
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| U.S. BANK NATIONAL ASSOCIATION, |
| Trustee |
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/s/ William E. Sicking |
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William E. Sicking |
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Vice President & Trust Officer |
[Third Supplemental Indenture]
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EXHIBIT A
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SCRIPPS NETWORKS INTERACTIVE, INC.
2.800% Senior Note Due 2020
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CUSIP No.: 811065AE1 |
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ISIN No.: US811065AE14 |
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$ |
SCRIPPS NETWORKS INTERACTIVE, INC., an Ohio corporation (the “Company”, which term includes any
successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $ (the “Principal”) on June 15, 2020.
Interest Payment Dates: June 15 and December 15 (each, an “Interest Payment Date”), commencing on December 15,
2015.
Interest Record Dates: June 1 and December 1 (each, an “Interest Record Date”).
Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at
this place.
A-1
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile
by its duly authorized officer.
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| SCRIPPS NETWORKS INTERACTIVE, INC. |
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Mark Schuermann |
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Senior Vice President and Treasurer |
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This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| Dated: June 2, 2015 |
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U.S. BANK NATIONAL ASSOCIATION,
Trustee |
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By: |
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Authorized Officer |
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(REVERSE OF SECURITY )
SCRIPPS NETWORKS INTERACTIVE, INC.
2.800% Senior Note Due 2020
1. Interest. SCRIPPS NETWORKS INTERACTIVE, INC., an Ohio corporation (the “Company”), promises to pay interest
on the principal amount of this Note at the rate per annum shown above. Cash interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from June 2, 2015. The Company will pay
interest semi-annually in arrears on each Interest Payment Date, commencing December 15, 2015. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If any Interest Payment Date is not a Business Day, then the related payment of interest for such Interest Payment Date shall be paid on the next succeeding Business Day with the same force and effect
as if made on such Interest Payment Date and no further interest shall accrue as a result of such delay.
The Company shall pay interest
on overdue principal from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the persons who are the
registered Holders at the close of business on the Interest Record Date immediately preceding the Interest Payment Date notwithstanding any transfer or exchange of such Note subsequent to such Interest Record Date and prior to such Interest Payment
Date. Holders must surrender Notes to the Trustee to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts
(“U.S. Legal Tender”). Payment of principal of (and premium, if any) and any such interest on this Note will be made at the Corporate Trust Office of the Trustee in Cincinnati, Ohio or at any other office or agency designated by the
Company for such purpose; provided that at the option of the Company payment of interest may be made by check mailed to the address of the Holder entitled thereto as such address appears in the Note register. However, the payments of interest, and
any portion of the principal (other than interest payable at maturity or on any redemption or repayment date or the final payment of principal) shall be made by the Paying Agent, upon receipt from the Company of immediately available funds by
12:30 p.m., New York City time (or such other time as may be agreed to between the Company and the Paying Agent or the Company), directly to a Holder (by Federal funds wire transfer or otherwise) if the Holder has delivered written instructions
to the Trustee 15 days prior to such payment date requesting that such payment will be so made and designating the bank account to which such payments shall be so made and in the case of payments of principal surrenders the same to the Trustee in
exchange for a Note or Notes aggregating the same principal amount as the unredeemed principal amount of the Notes surrendered.
3.
Paying Agent. Initially, U.S. Bank National Association (the “Trustee”) will act as Paying Agent. The Company may change any Paying Agent without notice to the Holders.
A-4
4. Indenture. The Company and the Trustee entered into an Indenture, dated as of
December 1, 2011 (the “Base Indenture”) and a Third Supplemental Indenture, dated as of June 2, 2015, setting forth certain terms of the Notes pursuant to Section 2.04 of the Base Indenture (the
“Supplemental Indenture” and, together with the Supplemental Indenture, the “Indenture”). Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include
those stated in the Base Indenture and those made part of the Base Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the “TIA”), as in
effect on the date of the Base Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and holders of Notes are referred to the Base Indenture and the TIA for a statement of them. To the extent the terms
of the Base Indenture and this Note are inconsistent, the terms of the Indenture shall govern.
The Supplemental Indenture imposes certain
limitations on the incurrence of liens and certain sale and leaseback transactions and limits the Company’s ability to consolidate, merge, convey, transfer or lease its properties and assets substantially as an entirety. To the extent the terms
of the Supplemental Indenture are inconsistent with the Indenture or this Note, the terms of the Supplemental Indenture shall govern.
5.
Optional Redemption. The Notes are redeemable, in whole or in part, at the option of the Company, at any time and from time to time at the redemption prices described in the Supplemental Indenture.
6. Change of Control Offer to Repurchase. If a Change of Control Triggering Event (as defined in the Supplemental Indenture)
occurs, unless the Company has exercised its right to redeem the Notes, Holders of the Notes will have the right to require the Company to repurchase all or a portion of their Notes pursuant to the offer described in the Supplemental Indenture at a
purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase, subject to the rights of Holders of Notes on the relevant Interest Record Date to receive interest due on the relevant
Interest Payment Date.
7. Special Mandatory Redemption. If a Special Mandatory Redemption Trigger (as defined in the
Supplemental Indenture) occurs, the Company will be required to redeem all the Notes pursuant to the terms described in the Supplemental Indenture at a redemption price equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to but excluding the date of redemption, subject to the rights of Holders of Notes on the relevant Interest Record Date to receive interest due on the relevant Interest Payment Date.
8. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $2,000 and
multiples of $1,000. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Company may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Company need not issue, authenticate, register the transfer of or exchange any Notes or portions thereof for a period of 15 days before
such series is selected for redemption, nor need the Company register the transfer or exchange of any Note selected for redemption in whole or in part.
A-5
9. Persons Deemed Owners. The registered Holder of a Note shall be treated as the
owner of it for all purposes.
10. Unclaimed Funds. If funds for the payment of principal or interest remain unclaimed for
two years, the Trustee and the Paying Agent will repay the funds to the Company at its written request. After that, all liability of the Trustee and such Paying Agent with respect to such funds shall cease.
11. Defeasance and Covenant Defeasance. The Company may be discharged from its obligations under the Notes and under the
Indenture with respect to the Notes except for certain provisions thereof, and may be discharged from obligations to comply with certain covenants contained in the Notes and in the Indenture with respect to the Notes, in each case upon satisfaction
of certain conditions specified in the Indenture.
12. Amendment; Supplement; Waiver. Subject to certain exceptions, the
Notes and the provisions of the Indenture relating to the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes of all series then outstanding affected by such
amendment or supplement (voting as one class), and any existing Default or Event of Default or compliance with certain provisions may be waived with the consent of the Holders of a majority in aggregate principal amount of all the Notes of such
series, each series voting as a separate class, (or of all the Notes, as the case may be, voting as a single class) then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture and the Notes
to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or make any other change that does not adversely affect the rights of any Holder of a Note.
13. Defaults and Remedies. If an Event of Default (other than certain bankruptcy Events of Default with respect to the Company)
occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes of this series then outstanding (voting as a separate class) may declare all of the Notes to be due and payable immediately in the manner and
with the effect provided in the Indenture. If a bankruptcy Event of Default with respect to the Company occurs and is continuing, the entire principal amount of the Notes then outstanding and interest accrued thereon, if any, shall immediately
become due and payable. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders
of Notes notice of certain continuing Defaults or Events of Default if it determines that withholding notice is in their interest.
14.
Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company as if it were not the Trustee.
A-6
15. No Recourse Against Others. No stockholder, director, officer, employee, member
or incorporator, as such, of the Company, or any successor Person thereof shall have any liability for any obligation under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each
Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.
16. Authentication. This Note shall not be valid until the Trustee manually signs the certificate of authentication on this
Note.
17. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
19. Governing Law. The laws of the State of New York shall govern the Indenture and
this Note thereof.
A-7
ASSIGNMENT FORM
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| I or we assign and transfer this Note to
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| (Print or type name, address and zip code of assignee or transferee) |
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| (Insert Social Security or other identifying number of assignee or transferee) |
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| and irrevocably appoint agent to transfer this Note on the books of the Company. The agent
may substitute another to act for him. |
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Signed: |
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(Signed exactly as name appears on the other side of this Note) |
A-8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.02 of the Supplemental Indenture, check the box.
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.02 of the Supplemental Indenture,
state the amount you elect to have purchased (must be integral multiples of $1,000):
$
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(Signed exactly as name appears on the other side of this Note) |
A-9
EXHIBIT B
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SCRIPPS NETWORKS INTERACTIVE, INC.
3.500% Senior Note Due 2022
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CUSIP No.: 811065AF8 |
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ISIN No.: US811065AF88 |
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$ |
SCRIPPS NETWORKS INTERACTIVE, INC., an Ohio corporation (the “Company”, which term includes any
successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $ (the “Principal”) on June 15, 2022.
Interest Payment Dates: June 15 and December 15 (each, an “Interest Payment Date”), commencing on December 15,
2015.
Interest Record Dates: June 1 and December 1 (each, an “Interest Record Date”).
Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at
this place.
B-1
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile
by its duly authorized officer.
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| SCRIPPS NETWORKS INTERACTIVE, INC. |
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| By: |
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| Name: |
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Mark Schuermann |
| Title: |
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Senior Vice President and Treasurer |
B-2
This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| Dated: June 2, 2015 |
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U.S. BANK NATIONAL ASSOCIATION, |
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Trustee |
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By: |
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Name: |
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Title: |
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Authorized Officer |
B-3
(REVERSE OF SECURITY)
SCRIPPS NETWORKS INTERACTIVE, INC.
3.500% Senior Note Due 2022
1. Interest. SCRIPPS NETWORKS INTERACTIVE, INC., an Ohio corporation (the “Company”), promises to pay interest
on the principal amount of this Note at the rate per annum shown above. Cash interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from June 2, 2015. The Company will pay
interest semi-annually in arrears on each Interest Payment Date, commencing December 15, 2015. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If any Interest Payment Date is not a Business Day, then the related payment of interest for such Interest Payment Date shall be paid on the next succeeding Business Day with the same force and effect
as if made on such Interest Payment Date and no further interest shall accrue as a result of such delay.
The Company shall pay interest
on overdue principal from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the persons who are the
registered Holders at the close of business on the Interest Record Date immediately preceding the Interest Payment Date notwithstanding any transfer or exchange of such Note subsequent to such Interest Record Date and prior to such Interest Payment
Date. Holders must surrender Notes to the Trustee to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts
(“U.S. Legal Tender”). Payment of principal of (and premium, if any) and any such interest on this Note will be made at the Corporate Trust Office of the Trustee in Cincinnati, Ohio or at any other office or agency designated by the
Company for such purpose; provided that at the option of the Company payment of interest may be made by check mailed to the address of the Holder entitled thereto as such address appears in the Note register. However, the payments of interest, and
any portion of the principal (other than interest payable at maturity or on any redemption or repayment date or the final payment of principal) shall be made by the Paying Agent, upon receipt from the Company of immediately available funds by
12:30 p.m., New York City time (or such other time as may be agreed to between the Company and the Paying Agent or the Company), directly to a Holder (by Federal funds wire transfer or otherwise) if the Holder has delivered written instructions
to the Trustee 15 days prior to such payment date requesting that such payment will be so made and designating the bank account to which such payments shall be so made and in the case of payments of principal surrenders the same to the Trustee in
exchange for a Note or Notes aggregating the same principal amount as the unredeemed principal amount of the Notes surrendered.
3.
Paying Agent. Initially, U.S. Bank National Association (the “Trustee”) will act as Paying Agent. The Company may change any Paying Agent without notice to the Holders.
B-4
4. Indenture. The Company and the Trustee entered into an Indenture, dated as of
December 1, 2011 (the “Base Indenture”) and a Third Supplemental Indenture, dated as of June 2, 2015, setting forth certain terms of the Notes pursuant to Section 2.04 of the Base Indenture (the
“Supplemental Indenture” and, together with the Supplemental Indenture, the “Indenture”). Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include
those stated in the Base Indenture and those made part of the Base Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the “TIA”), as in
effect on the date of the Base Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and holders of Notes are referred to the Base Indenture and the TIA for a statement of them. To the extent the terms
of the Base Indenture and this Note are inconsistent, the terms of the Indenture shall govern.
The Supplemental Indenture imposes certain
limitations on the incurrence of liens and certain sale and leaseback transactions and limits the Company’s ability to consolidate, merge, convey, transfer or lease its properties and assets substantially as an entirety. To the extent the terms
of the Supplemental Indenture are inconsistent with the Indenture or this Note, the terms of the Supplemental Indenture shall govern.
5.
Optional Redemption. The Notes are redeemable, in whole or in part, at the option of the Company, at any time and from time to time at the redemption prices described in the Supplemental Indenture.
6. Change of Control Offer to Repurchase. If a Change of Control Triggering Event (as defined in the Supplemental Indenture)
occurs, unless the Company has exercised its right to redeem the Notes, Holders of the Notes will have the right to require the Company to repurchase all or a portion of their Notes pursuant to the offer described in the Supplemental Indenture at a
purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase, subject to the rights of Holders of Notes on the relevant Interest Record Date to receive interest due on the relevant
Interest Payment Date.
7. Special Mandatory Redemption. If a Special Mandatory Redemption Trigger (as defined in the
Supplemental Indenture) occurs, the Company will be required to redeem all the Notes pursuant to the terms described in the Supplemental Indenture at a redemption price equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to but excluding the date of redemption, subject to the rights of Holders of Notes on the relevant Interest Record Date to receive interest due on the relevant Interest Payment Date.
8. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $2,000 and
multiples of $1,000. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Company may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Company need not issue, authenticate, register the transfer of or exchange any Notes or portions thereof for a period of 15 days before
such series is selected for redemption, nor need the Company register the transfer or exchange of any Note selected for redemption in whole or in part.
B-5
9. Persons Deemed Owners. The registered Holder of a Note shall be treated as the
owner of it for all purposes.
10. Unclaimed Funds. If funds for the payment of principal or interest remain unclaimed for
two years, the Trustee and the Paying Agent will repay the funds to the Company at its written request. After that, all liability of the Trustee and such Paying Agent with respect to such funds shall cease.
11. Defeasance and Covenant Defeasance. The Company may be discharged from its obligations under the Notes and under the
Indenture with respect to the Notes except for certain provisions thereof, and may be discharged from obligations to comply with certain covenants contained in the Notes and in the Indenture with respect to the Notes, in each case upon satisfaction
of certain conditions specified in the Indenture.
12. Amendment; Supplement; Waiver. Subject to certain exceptions, the
Notes and the provisions of the Indenture relating to the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes of all series then outstanding affected by such
amendment or supplement (voting as one class), and any existing Default or Event of Default or compliance with certain provisions may be waived with the consent of the Holders of a majority in aggregate principal amount of all the Notes of such
series, each series voting as a separate class, (or of all the Notes, as the case may be, voting as a single class) then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture and the Notes
to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or make any other change that does not adversely affect the rights of any Holder of a Note.
13. Defaults and Remedies. If an Event of Default (other than certain bankruptcy Events of Default with respect to the Company)
occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes of this series then outstanding (voting as a separate class) may declare all of the Notes to be due and payable immediately in the manner and
with the effect provided in the Indenture. If a bankruptcy Event of Default with respect to the Company occurs and is continuing, the entire principal amount of the Notes then outstanding and interest accrued thereon, if any, shall immediately
become due and payable. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders
of Notes notice of certain continuing Defaults or Events of Default if it determines that withholding notice is in their interest.
14.
Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company as if it were not the Trustee.
B-6
15. No Recourse Against Others. No stockholder, director, officer, employee, member
or incorporator, as such, of the Company, or any successor Person thereof shall have any liability for any obligation under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each
Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.
16. Authentication. This Note shall not be valid until the Trustee manually signs the certificate of authentication on this
Note.
17. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
19. Governing Law. The laws of the State of New York shall govern the Indenture and
this Note thereof.
B-7
ASSIGNMENT FORM
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| I or we assign and transfer this Note to
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| (Print or type name, address and zip code of assignee or transferee) |
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| (Insert Social Security or other identifying number of assignee or transferee) |
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| and irrevocably appoint agent to transfer this Note on the books of the Company. The agent
may substitute another to act for him. |
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| Dated: |
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Signed: |
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(Signed exactly as name appears on the other side of this Note) |
B-8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.02 of the Supplemental Indenture, check the box.
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.02 of the Supplemental Indenture,
state the amount you elect to have purchased (must be integral multiples of $1,000):
$
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| Dated: |
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Signed: |
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(Signed exactly as name appears on the other side of this Note) |
B-9
EXHIBIT C
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SCRIPPS NETWORKS INTERACTIVE, INC.
3.950% Senior Note Due 2025
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| No. |
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CUSIP No.: 811065AG6 |
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ISIN No.: US811065AG61 |
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$ |
SCRIPPS NETWORKS INTERACTIVE, INC., an Ohio corporation (the “Company”, which term includes any
successor corporation), for value received promises to pay to CEDE & CO., or registered assigns, the principal sum of $ (the “Principal”) on June 15, 2025.
Interest Payment Dates: June 15 and December 15 (each, an “Interest Payment Date”), commencing on December 15,
2015.
Interest Record Dates: June 1 and December 1 (each, an “Interest Record Date”).
Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at
this place.
C-1
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile
by its duly authorized officer.
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| SCRIPPS NETWORKS INTERACTIVE, INC. |
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| By: |
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| Name: |
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Mark Schuermann |
| Title: |
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Senior Vice President and Treasurer |
C-2
This is one of the Notes of the series designated herein and referred to in the within-mentioned Indenture.
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| Dated: June 2, 2015 |
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U.S. BANK NATIONAL ASSOCIATION,
Trustee |
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By: |
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Name: |
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Title: |
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Authorized Officer |
C-3
(REVERSE OF SECURITY)
SCRIPPS NETWORKS INTERACTIVE, INC.
3.950% Senior Note Due 2025
1. Interest. SCRIPPS NETWORKS INTERACTIVE, INC., an Ohio corporation (the “Company”), promises to pay interest
on the principal amount of this Note at the rate per annum shown above. Cash interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from June 2, 2015. The Company will pay
interest semi-annually in arrears on each Interest Payment Date, commencing December 15, 2015. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If any Interest Payment Date is not a Business Day, then the related payment of interest for such Interest Payment Date shall be paid on the next succeeding Business Day with the same force and effect
as if made on such Interest Payment Date and no further interest shall accrue as a result of such delay.
The Company shall pay interest
on overdue principal from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the persons who are the
registered Holders at the close of business on the Interest Record Date immediately preceding the Interest Payment Date notwithstanding any transfer or exchange of such Note subsequent to such Interest Record Date and prior to such Interest Payment
Date. Holders must surrender Notes to the Trustee to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts
(“U.S. Legal Tender”). Payment of principal of (and premium, if any) and any such interest on this Note will be made at the Corporate Trust Office of the Trustee in Cincinnati, Ohio or at any other office or agency designated by the
Company for such purpose; provided that at the option of the Company payment of interest may be made by check mailed to the address of the Holder entitled thereto as such address appears in the Note register. However, the payments of interest, and
any portion of the principal (other than interest payable at maturity or on any redemption or repayment date or the final payment of principal) shall be made by the Paying Agent, upon receipt from the Company of immediately available funds by
12:30 p.m., New York City time (or such other time as may be agreed to between the Company and the Paying Agent or the Company), directly to a Holder (by Federal funds wire transfer or otherwise) if the Holder has delivered written instructions
to the Trustee 15 days prior to such payment date requesting that such payment will be so made and designating the bank account to which such payments shall be so made and in the case of payments of principal surrenders the same to the Trustee in
exchange for a Note or Notes aggregating the same principal amount as the unredeemed principal amount of the Notes surrendered.
3.
Paying Agent. Initially, U.S. Bank National Association (the “Trustee”) will act as Paying Agent. The Company may change any Paying Agent without notice to the Holders.
C-4
4. Indenture. The Company and the Trustee entered into an Indenture, dated as of
December 1, 2011 (the “Base Indenture”) and a Third Supplemental Indenture, dated as of June 2, 2015, setting forth certain terms of the Notes pursuant to Section 2.04 of the Base Indenture (the
“Supplemental Indenture” and, together with the Supplemental Indenture, the “Indenture”). Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Base Indenture and those made part of the Base Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the
“TIA”), as in effect on the date of the Base Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and holders of Notes are referred to the Base Indenture and the TIA for a statement of
them. To the extent the terms of the Base Indenture and this Note are inconsistent, the terms of the Indenture shall govern.
The
Supplemental Indenture imposes certain limitations on the incurrence of liens and certain sale and leaseback transactions and limits the Company’s ability to consolidate, merge, convey, transfer or lease its properties and assets substantially
as an entirety. To the extent the terms of the Supplemental Indenture are inconsistent with the Indenture or this Note, the terms of the Supplemental Indenture shall govern.
5. Optional Redemption. The Notes are redeemable, in whole or in part, at the option of the Company, at any time and from time
to time at the redemption prices described in the Supplemental Indenture.
6. Change of Control Offer to Repurchase. If a
Change of Control Triggering Event (as defined in the Supplemental Indenture) occurs, unless the Company has exercised its right to redeem the Notes, Holders of the Notes will have the right to require the Company to repurchase all or a portion of
their Notes pursuant to the offer described in the Supplemental Indenture at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase, subject to the rights of Holders of
Notes on the relevant Interest Record Date to receive interest due on the relevant Interest Payment Date.
7. Special Mandatory
Redemption. If a Special Mandatory Redemption Trigger (as defined in the Supplemental Indenture) occurs, the Company will be required to redeem all the Notes pursuant to the terms described in the Supplemental Indenture at a redemption price
equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to but excluding the date of redemption, subject to the rights of Holders of Notes on the relevant Interest Record Date to receive interest due on the relevant
Interest Payment Date.
8. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in
denominations of $2,000 and multiples of $1,000. A Holder shall register the transfer of or exchange Notes in accordance with the Indenture. The Company may require a Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Company need not issue, authenticate, register the transfer of or exchange any Notes or portions thereof
for a period of 15 days before such series is selected for redemption, nor need the Company register the transfer or exchange of any Note selected for redemption in whole or in part.
C-5
9. Persons Deemed Owners. The registered Holder of a Note shall be treated as the
owner of it for all purposes.
10. Unclaimed Funds. If funds for the payment of principal or interest remain unclaimed for
two years, the Trustee and the Paying Agent will repay the funds to the Company at its written request. After that, all liability of the Trustee and such Paying Agent with respect to such funds shall cease.
11. Defeasance and Covenant Defeasance. The Company may be discharged from its obligations under the Notes and under the
Indenture with respect to the Notes except for certain provisions thereof, and may be discharged from obligations to comply with certain covenants contained in the Notes and in the Indenture with respect to the Notes, in each case upon satisfaction
of certain conditions specified in the Indenture.
12. Amendment; Supplement; Waiver. Subject to certain exceptions, the
Notes and the provisions of the Indenture relating to the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes of all series then outstanding affected by such
amendment or supplement (voting as one class), and any existing Default or Event of Default or compliance with certain provisions may be waived with the consent of the Holders of a majority in aggregate principal amount of all the Notes of such
series, each series voting as a separate class, (or of all the Notes, as the case may be, voting as a single class) then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture and the Notes
to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, or make any other change that does not adversely affect the rights of any Holder of a Note.
13. Defaults and Remedies. If an Event of Default (other than certain bankruptcy Events of Default with respect to the Company)
occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Notes of this series then outstanding (voting as a separate class) may declare all of the Notes to be due and payable immediately in the manner and
with the effect provided in the Indenture. If a bankruptcy Event of Default with respect to the Company occurs and is continuing, the entire principal amount of the Notes then outstanding and interest accrued thereon, if any, shall immediately
become due and payable. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has received indemnity satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders
of Notes notice of certain continuing Defaults or Events of Default if it determines that withholding notice is in their interest.
14.
Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company as if it were not the Trustee.
C-6
15. No Recourse Against Others. No stockholder, director, officer, employee, member
or incorporator, as such, of the Company, or any successor Person thereof shall have any liability for any obligation under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each
Holder of a Note by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.
16. Authentication. This Note shall not be valid until the Trustee manually signs the certificate of authentication on this
Note.
17. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
19. Governing Law. The laws of the State of New York shall govern the Indenture and
this Note thereof.
C-7
ASSIGNMENT FORM
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| I or we assign and transfer this Note to
|
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| (Print or type name, address and zip code of assignee or transferee) |
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| |
| (Insert Social Security or other identifying number of assignee or transferee) |
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| and irrevocably appoint agent to transfer this Note on the books of the Company. The agent
may substitute another to act for him. |
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| Dated: |
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Signed: |
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(Signed exactly as name appears on the other side of this Note) |
C-8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.02 of the Supplemental Indenture, check the box.
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.02 of the Supplemental Indenture,
state the amount you elect to have purchased (must be integral multiples of $1,000):
$
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| Dated: |
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Signed: |
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(Signed exactly as name appears on the other side of this Note) |
C-9
Exhibit 5.1
June 2, 2015
Scripps
Network Interactive, Inc.
9721 Sherill Boulevard
Knoxville,
Tennessee 37932
Ladies and Gentlemen:
We have acted as
special counsel to Scripps Networks Interactive, Inc., an Ohio corporation (the “Company”), in connection with the offering and sale by the Company of $600,000,000 in principal amount of the Company’s 2.800% Senior Notes due
2020, $400,000,000 in principal amount of the Company’s 3.500% Senior Notes due 2022, and $500,000,000 in principal amount of the Company’s 3.950% Senior Notes due 2025 (collectively, the “Notes”) pursuant to the
Underwriting Agreement dated May 18, 2015 (the “Underwriting Agreement”) by and among the Company, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mitsubishi UFJ Securities (USA), Inc.
and Wells Fargo Securities, LLC, as representatives of the underwriters listed on Schedule 1 to the Underwriting Agreement. The Notes are being issued under an Indenture dated as of December 1, 2011, as modified by a First Supplemental
Indenture dated as of December 1, 2011, a Second Supplemental Indenture dated as of November 24 2014 and a Third Supplemental Indenture dated as of June 2, 2015 (collectively, the “Indenture”) by and between the
Company and U.S. Bank National Association, as trustee (the “Trustee”). The offering and sale of the Notes have been registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the
Registration Statement on Form S-3 (Reg. No. 333-200213) (the “Registration Statement”) filed by the Company with the Securities and Exchange Commission (the “Commission”) on November 14, 2014, which
automatically became effective on the date of filing pursuant to Rule 462(e) under the Securities Act, including the base prospectus contained therein and a prospectus supplement dated May 18, 2015 (collectively, the
“Prospectus”).
In connection with this opinion, we have examined and relied upon the originals, or copies identified to our
satisfaction, of each of the following agreements and documents:
(i) the executed Underwriting Agreement;
(ii) the executed Indenture (including the form of Notes);
(iii) the Registration Statement;
(iv) the Prospectus;
Scripps Network Interactive, Inc.
June 2, 2015
Page
2
(v) the Amended and Restated Articles of Incorporation of the Company, as
certified by the Secretary of State of Ohio on May 13, 2015; and
(vi) a certificate of the Secretary of the Company
dated June 2, 2015, including the resolutions adopted by the Board of Directors of the Company and the Amended and Restated Code of Regulations of the Company attached thereto (the “Certificate”).
We also have examined originals or copies, certified or otherwise identified to our satisfaction, of such other documents, corporate records, certificates of
public officials and officers of the Company and other instruments as we have deemed necessary or advisable for purposes of this opinion.
In our
examination, we have assumed the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, photostatic or facsimile
copies and the authenticity of the originals of such copies. We also have assumed that the Underwriting Agreement and the Indenture are legal, valid and binding obligations of each party thereto other than the Company, enforceable against such other
parties in accordance with their respective terms. As to any facts material to this opinion, we have relied, without independent verification, upon the Certificate and other oral or written statements of officers and other representatives of the
Company and others, including public officials.
Based upon the foregoing and subject to qualifications hereinafter set forth, it is our opinion that the
Notes have been duly authorized by the Company and, when executed and authenticated as provided in the Indenture and delivered and paid for as provided in the Underwriting Agreement, the Notes will be legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting
creditors’ rights and to general principles of equity.
We are members of the Bars of the States of Ohio and New York, and we express no opinion as
to any matter governed by any laws other than those of the States of Ohio and New York and the federal laws of the United States.
This opinion is limited
to the conclusions specifically stated herein, and no opinion may be inferred or implied beyond such specific conclusions. We disclaim any undertaking or obligation to advise you of any changes in the matters covered by this opinion that may come to
our attention after the date hereof.
We hereby consent to the filing of this opinion as an exhibit to the Company’s Current Report on Form 8-K dated
June 2, 2015 which is being filed with the Commission and will be incorporated
Scripps Network Interactive, Inc.
June 2, 2015
Page
3
by reference into the Prospectus and we further continue to consent to the inclusion of the reference to us under the heading “Legal Matters” in the Prospectus; however, in giving such
consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.
|
| Sincerely, |
|
| /s/ David A. Neuhardt |
|
| JSS; DAN;JBK |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined balance sheet of the Company as of March 31, 2015 gives effect to (i) the
Company Financing, (ii) the N-Vision Acquisition, (iii) the N-Vision Debt Refinancing and (iv) the TVN Tender Offer, each as more fully described below, as if they each occurred as of March 31, 2015. The following unaudited pro
forma condensed combined statements of operations of the Company for the three-month period ended March 31, 2015 and the year ended December 31, 2014 similarly give effect to the Company Financing, the N-Vision Acquisition, the N-Vision
Debt Refinancing and the TVN Tender Offer, as if they each occurred at the beginning of the period on January 1, 2014. The Company Financing, the N-Vision Acquisition, the N-Vision Debt Refinancing and the TVN Tender Offer are collectively
referred to as the “Transactions.”
The unaudited pro forma condensed combined financial information has been derived from, and
should be read in conjunction with, the Company’s historical audited and interim unaudited consolidated financial statements, including the notes thereto, and N-Vision’s historical audited consolidated financial statements, including the
notes thereto. The financial statements of the Company are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2015. The annual financial statements of N-Vision, which were prepared under International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) are included in the Company’s Current Report
on Form 8-K dated May 18, 2015. The historical interim financial information of N-Vision was derived from N-Vision’s unaudited interim consolidated financial statements which are not included or incorporated by reference herein.
The unaudited pro forma condensed combined financial information includes unaudited pro forma adjustments that are factually supportable and
directly attributed to the Transactions. In addition, with respect to the unaudited pro forma condensed combined statements of operations, the unaudited pro forma adjustments are expected to have a continuing impact on the consolidated results.
Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial information.
The unaudited pro forma adjustments are based upon available information and certain assumptions that the Company’s management believe
are reasonable. The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of the Company’s financial position or results of operations that would have
occurred had the events been consummated as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information is not necessarily indicative of the Company’s future financial condition or operating results.
The Company Financing
In order to
fund the cost of the N-Vision Acquisition, the N-Vision Debt Refinancing and the TVN Tender Offer, as well as to increase the Company’s financial capacity for general corporate and working capital purposes, the Company entered into a series of
financing transactions.
The Company issued approximately $1.5 billion of long-term debt consisting of the following debt securities:
(i) $600 million in aggregate principal amount of 2020 Notes at an interest rate of 2.800%, (ii) $400 million in aggregate principal amount of 2022 Notes at an interest rate of 3.500%, and (iii) $500 million in aggregate principal
amount of 2025 Notes at an interest rate of 3.950% (collectively, the “Public Debt Financing”). Aggregate net proceeds expected to be raised under the Public Debt Financing are approximately $1.483 billion.
In addition, in May 2015, the Company amended its existing Revolving Credit Facility (the “Old Revolving Credit Facility”) with a
group of banks to provide, among other things, for increased borrowing availability and an extended term (the “Amended Revolving Credit Facility” and collectively, the “Bank Financing”). The Amended Revolving Credit Facility now
permits borrowings of up to $900 million from the
former $650 million limit, with the option to increase the borrowing availability by an additional $250 million.
Additionally, we extended the maturity date of the Amended Revolving Credit Facility by one year to a scheduled maturity of March 31, 2020, with the exception of $32.5 million which remains scheduled to mature on March 31, 2019. Borrowings
under the Amended Revolving Credit Facility bear interest based on the Company’s credit ratings, with drawn amounts bearing interest at Libor plus 125 basis points and undrawn amounts bearing interest at 15 basis points. The Amended Revolving
Credit Facility continues to contain certain affirmative and negative covenants, including a restriction on the incurrence of additional indebtedness and maintenance of a maximum leverage ratio. There are no mandatory reductions in borrowing
availability throughout the term.
The Public Debt Financing, together with the Bank Financing, are referred to herein as the
“Company Financing.”
The N-Vision Acquisition
The N-Vision Acquisition reflects the Company’s planned purchase of all the outstanding shares of N-Vision for a purchase price of
approximately €584 million in cash, which equates to approximately $634 million using foreign currency exchange rates in effect as of March 31, 2015. The purchase price to be paid in connection with the N-Vision Acquisition is
expected to be funded with available cash and cash equivalents raised in the Company Financing. The Company also will assume up to €865 million principal amount of debt as part of the N-Vision Acquisition, which equates to approximately
$940 million of debt using foreign currency exchange rates in effect as of March 31, 2015.
The N-Vision Debt Refinancing
The N-Vision Debt Refinancing reflects the Company’s planned redemption of over half of the outstanding indebtedness of N-Vision and its
subsidiaries to be assumed in the N-Vision Acquisition (the “N-Vision Debt Refinancing”). In particular, the Company intends to redeem approximately $491 million principal amount of debt, based on foreign currency exchange rates in effect
as of March 31, 2015, consisting of: (i) €110 million principal amount of Senior Notes due 2018, (ii) €43 million principal amount of Senior Notes due 2020, and (iii) €300 million principal amount of
Senior PIK Toggle Notes due 2021 (collectively, the “N-Vision Assumed Debt Securities”). The aggregate redemption cost of the N-Vision Assumed Debt Securities is expected to be approximately $567 million excluding accrued interest, based
on foreign currency exchange rates in effect as of March 31, 2015. The aggregate redemption cost of the N-Vision Assumed Debt Securities is expected to be funded with available cash and cash equivalents to be raised in the Company Financing,
and the Company intends to fund the aggregate redemption cost by N-Vision with related intercompany loans. After the N-Vision Debt Refinancing, approximately €412 million principal amount of indebtedness will be outstanding, consisting of
€387 million principal amount of Senior Notes due 2020 and a €25 million revolving credit facility.
The TVN Tender Offer
TVN is owned 52.7% by N-Vision and 47.3% through a public common-stock equity interest listed on the Warsaw Stock Exchange. Pursuant to Polish
takeover law, the Company is required to commence a tender offer to the public shareholders to acquire additional TVN common shares owned by the public within three months from the closing date of the N-Vision Acquisition (the “TVN Tender
Offer”), increasing the Company’s ownership in TVN to a minimum of up to 66%. The Company also has the option of increasing the TVN Tender Offer to acquire 100% of the remaining public ownership in TVN.
The Company’s Board of Directors has authorized management, in its discretion, to offer to purchase up to 100% of the outstanding public
shares of TVN. At this time, management has not made a determination whether to pursue any additional shares of TVN above the 66% required under Polish takeover law. Such a decision will be made at a later date based on a variety of factors,
including market conditions and strategic considerations.
Given the uncertainty as to whether the Company will actually elect to purchase the full 100% of
the remaining public ownership in TVN, the accompanying unaudited pro forma condensed combined financial information reflects the minimum required offer to acquire up to a minimum of 66%. The expected purchase price for the minimum-required TVN
Tender Offer is approximately $240 million, based on an estimated 45.3 million shares to be acquired at an assumed purchase price of 20.00 Zloty (“PLN”) per share, translated using foreign currency exchange rates in effect as of
March 31, 2015. TVN’s shares closed at 17.50 PLN on the Warsaw Stock Exchange on May 15, 2015. The Company intends to fund the TVN Tender Offer with available cash and cash equivalents raised in the Company Financing.
However, if the Company elects to acquire 100% of the remaining public ownership in TVN, it is expected that the purchase price would increase
by approximately $612 million to an aggregate $852 million, based on an estimated 160.9 million shares to be acquired at an assumed purchase price of 20.00 PLN per share, translated using foreign currency exchange rates in effect as of
March 31, 2015. The Company would intend to fund the incremental purchase price with new borrowings under its Amended Revolving Credit Facility (or other sources of financing) of approximately $612 million. This would increase long-term debt
and reduce the non-controlling interest classified within equity by an equal amount of $612 million in the accompanying unaudited pro forma condensed combined balance sheet as of March 31, 2015. In addition, for the three months ended
March 31, 2015 and the year ended December 31, 2014, this would have the effect of (i) increasing interest expense on a pro forma basis by $2.7 million and $10.1 million, respectively; (ii) decreasing net income on a pro forma
basis by $1.7 million and $6.6 million, respectively; (iii) decreasing net income attributable to the non-controlling interest on a pro forma basis by $9.7 million and $16.9 million, due to no portion of the public ownership remaining
outstanding; and (iv) increasing net income attributable to the Company on a pro forma basis by $8.0 million and $10.3 million, respectively.
Purchase Price Allocation
The N-Vision
Acquisition and the TVN Tender Offer will be accounted for as business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC
805”), which will establish a new basis of accounting for all identifiable assets acquired and liabilities assumed at fair value as of the date control is obtained. Accordingly, the cost to acquire such interests will be allocated to the
underlying net assets in proportion to their respective fair values, including to the non-controlling interest in the equity of TVN held by the public and to be acquired, in whole or in part, in the TVN Tender Offer. Any excess of the purchase price
over the estimated fair value of the net assets acquired will be recorded as goodwill. As more fully described in the notes to the unaudited pro forma condensed combined financial information, a preliminary allocation of the excess of cost over the
fair value of net tangible assets acquired has been made to identifiable intangible assets in the amounts of approximately $70 million to finite-lived customer relationships; $300 million to indefinite-lived brands and trademarks; $55 million to
finite-lived brands and trademarks; $150 million to finite-lived acquired network distribution rights; $250 million to finite-lived broadcast licenses; and $1.152 billion to goodwill. In addition, approximately $852 million was allocated to the
non-controlling interest in the equity of TVN held by the public. The allocation of purchase price is preliminary at this time, and will remain as such until the Company finalizes the valuation of the net assets acquired, which is not expected to be
substantially completed until the Fall of 2015. The final allocation of the purchase price is dependent on a number of factors, including the final valuation of the fair value of all tangible and intangible assets acquired and liabilities assumed as
of the closing dates of the N-Vision Acquisition and the TVN Tender Offer when additional information will be available. Such final adjustments, including changes to amortizable tangible and intangible assets, may be material.
Acquisition-related transaction costs are expensed as incurred and generally include costs for legal, tax, accounting, banking, consulting and
other services that are direct, incremental costs of the acquisition. The Company estimates acquisition-related transaction costs to be approximately $35 million for the N-Vision Acquisition and the TVN Tender Offer. Approximately $12 million of
those transaction costs were included cumulatively in the Company’s and N-Vision’s historical financial statements for the three-month period ended March 31, 2015 and the year ended December 31, 2014. The remaining $23 million of
those estimated costs will
be recorded in subsequent periods when the closing of the N-Vision acquisition and the TVN Tender Offer occur. As
acquisition-related transaction costs are not expected to have a continuing impact on the combined entity, such costs have been eliminated from the unaudited pro forma condensed combined statements of operations for all periods. However, pro forma
effect has been given to the incurrence of all acquisition-related transaction costs in the unaudited pro forma condensed combined balance sheet as of March 31, 2015.
The consummation of the N-Vision Acquisition and TVN Tender Offer remains subject to the satisfaction of customary closing conditions,
including the absence of any material adverse change in the TVN business and the receipt of regulatory approvals.
Sources and Uses of Proceeds
The following table presents a summary of the sources and expected uses of proceeds from the Company Financing (in millions):
|
|
|
|
|
| Sources: |
|
|
|
|
| Gross borrowings |
|
$ |
1,500 |
|
| Issuance discounts and costs |
|
|
(17 |
) |
|
|
|
|
|
| Net proceeds available |
|
$ |
1,483 |
|
|
|
|
|
|
| Uses: |
|
|
|
|
| N-Vision Acquisition |
|
$ |
(634 |
) |
| N-Vision Debt Refinancing, including $12 million of accrued interest |
|
|
(579 |
) |
| N-Vision Tender Offer |
|
|
(240 |
) |
| Estimated transaction-related costs |
|
|
(23 |
) |
|
|
|
|
|
| Net uses of proceeds |
|
$ |
(1,476 |
) |
|
|
|
|
|
| Net cash available for general corporate and working capital purposes |
|
$ |
7 |
|
|
|
|
|
|
Interest Rate Sensitivity
As of March 31, 2015, on a pro forma basis after giving effect to the Company Financing, the N-Vision Acquisition, the N-Vision Debt
Refinancing and the TVN Tender Offer, the Company would have had approximately $369 million in principal of variable-rate indebtedness. As such, the Company’s financing costs are sensitive to changes in interest rates. For each 0.125% increase
or decrease in interest rates, the Company’s annual interest expense would increase or decrease by approximately $0.5 million, and net income would decrease or increase, respectively, by approximately $0.3 million.
Scripps Networks Interactive, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Pro Forma Adjustments |
|
|
|
|
| |
|
Company
Historical(1) |
|
|
N-Vision
Historical(2) |
|
|
Company
Financing(3) |
|
|
N-Vision
Acquisition(4) |
|
|
N-Vision Purchase
Price Allocation(5) |
|
|
N-Vision Debt
Refinancing(6) |
|
|
TVN
Tender Offer(7) |
|
|
Total
Pro Forma |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
154,785 |
|
|
$ |
81,245 |
|
|
$ |
1,483,000 |
|
|
$ |
(633,655 |
) |
|
$ |
— |
|
|
$ |
(578,693 |
) |
|
$ |
(241,660 |
) |
|
$ |
265,022 |
|
| Short-term investments |
|
|
— |
|
|
|
13,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,998 |
|
| Accounts receivable, net of allowances |
|
|
630,322 |
|
|
|
98,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
728,791 |
|
| Programs and program licenses |
|
|
490,391 |
|
|
|
54,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
544,822 |
|
| Deferred income taxes |
|
|
55,994 |
|
|
|
37,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,917 |
|
| Other current assets |
|
|
74,575 |
|
|
|
46,562 |
|
|
|
1,871 |
|
|
|
|
|
|
|
(19,539 |
) |
|
|
|
|
|
|
|
|
|
|
103,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
|
1,406,067 |
|
|
|
332,628 |
|
|
|
1,484,871 |
|
|
|
(633,655 |
) |
|
|
(19,539 |
) |
|
|
(578,693 |
) |
|
|
(241,660 |
) |
|
|
1,750,019 |
|
| Investments |
|
|
439,240 |
|
|
|
470,871 |
|
|
|
|
|
|
|
633,655 |
|
|
|
(633,655 |
) |
|
|
|
|
|
|
|
|
|
|
910,111 |
|
| Property and equipment, net of accumulated depreciation |
|
|
214,779 |
|
|
|
104,813 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
319,592 |
|
| Goodwill |
|
|
572,047 |
|
|
|
38,165 |
|
|
|
|
|
|
|
|
|
|
|
1,113,874 |
|
|
|
|
|
|
|
|
|
|
|
1,724,086 |
|
| Other intangible assets, net |
|
|
582,360 |
|
|
|
16,096 |
|
|
|
|
|
|
|
|
|
|
|
808,904 |
|
|
|
|
|
|
|
|
|
|
|
1,407,360 |
|
| Programs and program licenses (less current portion) |
|
|
488,947 |
|
|
|
45,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534,039 |
|
| Deferred income taxes |
|
|
50,045 |
|
|
|
40,723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,768 |
|
| Other non-current assets |
|
|
182,139 |
|
|
|
99 |
|
|
|
11,129 |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
193,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Assets |
|
$ |
3,935,624 |
|
|
$ |
1,048,487 |
|
|
$ |
1,496,000 |
|
|
$ |
— |
|
|
$ |
1,269,584 |
|
|
$ |
(578,693 |
) |
|
$ |
(241,660 |
) |
|
$ |
6,929,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
20,075 |
|
|
$ |
42,880 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
62,955 |
|
| Current portion of debt |
|
|
— |
|
|
|
5,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,414 |
|
| Program rights payable |
|
|
32,269 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,269 |
|
| Customer deposits and unearned revenue |
|
|
56,146 |
|
|
|
2,217 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
58,363 |
|
| Other accrued liabilities |
|
|
218,765 |
|
|
|
97,038 |
|
|
|
|
|
|
|
17,618 |
|
|
|
|
|
|
|
(11,693 |
) |
|
|
|
|
|
|
321,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
327,255 |
|
|
|
147,549 |
|
|
|
— |
|
|
|
17,618 |
|
|
|
— |
|
|
|
(11,693 |
) |
|
|
— |
|
|
|
480,729 |
|
| Debt (less current portion) |
|
|
1,844,622 |
|
|
|
923,397 |
|
|
|
1,496,000 |
|
|
|
|
|
|
|
127,000 |
|
|
|
(567,000 |
) |
|
|
— |
|
|
|
3,824,019 |
|
| Other liabilities (less current portion) |
|
|
239,693 |
|
|
|
9,985 |
|
|
|
|
|
|
|
|
|
|
|
257,815 |
|
|
|
|
|
|
|
|
|
|
|
507,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Liabilities |
|
|
2,411,570 |
|
|
|
1,080,931 |
|
|
|
1,496,000 |
|
|
|
17,618 |
|
|
|
384,815 |
|
|
|
(578,693 |
) |
|
|
— |
|
|
|
4,812,241 |
|
| Redeemable Non-Controlling Interest |
|
|
98,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,268 |
|
| Total Equity |
|
|
1,425,786 |
|
|
|
(32,444 |
) |
|
|
|
|
|
|
(17,618 |
) |
|
|
884,769 |
|
|
|
— |
|
|
|
(241,660 |
) |
|
|
2,018,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Liabilities, Redeemable Non-Controlling Interest and Equity |
|
$ |
3,935,624 |
|
|
$ |
1,048,487 |
|
|
$ |
1,496,000 |
|
|
$ |
— |
|
|
$ |
1,269,584 |
|
|
$ |
(578,693 |
) |
|
$ |
(241,660 |
) |
|
$ |
6,929,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scripps Networks Interactive, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Pro Forma Adjustments |
|
|
|
|
| |
|
Company
Historical(8) |
|
|
N-Vision
Historical(9) |
|
|
Company
Financing(10) |
|
|
N-Vision
Acquisition(11) |
|
|
N-Vision Purchase
Price Allocation(12) |
|
|
N-Vision Debt
Refinancing(13) |
|
|
TVN
Tender Offer(14) |
|
|
Total
Pro Forma |
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Advertising |
|
$ |
435,268 |
|
|
$ |
78,655 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
513,923 |
|
| Network affiliate fees, net |
|
|
209,008 |
|
|
|
14,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
223,073 |
|
| Other |
|
|
13,974 |
|
|
|
4,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating revenues |
|
|
658,250 |
|
|
|
97,593 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
755,843 |
|
| Cost of services, excluding depreciation and amortization of intangible assets |
|
|
199,147 |
|
|
|
56,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
255,169 |
|
| Selling, general and administrative |
|
|
202,187 |
|
|
|
17,478 |
|
|
|
|
|
|
|
(10,545 |
) |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
209,120 |
|
| Depreciation |
|
|
16,895 |
|
|
|
4,463 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
21,358 |
|
| Amortization of intangible assets |
|
|
11,695 |
|
|
|
274 |
|
|
|
|
|
|
|
|
|
|
|
7,168 |
|
|
|
|
|
|
|
|
|
|
|
19,137 |
|
| Losses (gains) on disposal of property and equipment |
|
|
2,516 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
|
432,440 |
|
|
|
78,237 |
|
|
|
— |
|
|
|
(10,545 |
) |
|
|
7,168 |
|
|
|
— |
|
|
|
— |
|
|
|
507,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
225,810 |
|
|
|
19,356 |
|
|
|
— |
|
|
|
10,545 |
|
|
|
(7,168 |
) |
|
|
— |
|
|
|
— |
|
|
|
248,543 |
|
| Interest expense, net |
|
|
(12,967 |
) |
|
|
(21,457 |
) |
|
|
(13,444 |
) |
|
|
|
|
|
|
2,542 |
|
|
|
12,860 |
|
|
|
— |
|
|
|
(32,466 |
) |
| Equity in earnings of affiliates |
|
|
18,945 |
|
|
|
4,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,219 |
|
| Miscellaneous, net |
|
|
5,531 |
|
|
|
24,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,095 |
|
| Loss on retirement of debt |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations before income taxes |
|
|
237,319 |
|
|
|
26,737 |
|
|
|
(13,444 |
) |
|
|
10,545 |
|
|
|
(4,626 |
) |
|
|
12,860 |
|
|
|
— |
|
|
|
269,391 |
|
| Provision for income taxes |
|
|
(71,249 |
) |
|
|
(4,818 |
) |
|
|
5,109 |
|
|
|
(1,230 |
) |
|
|
1,758 |
|
|
|
(2,958 |
) |
|
|
— |
|
|
|
(73,388 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
166,070 |
|
|
|
21,919 |
|
|
|
(8,335 |
) |
|
|
9,315 |
|
|
|
(2,868 |
) |
|
|
9,902 |
|
|
|
— |
|
|
|
196,003 |
|
| Less: net income attributable to non-controlling interests |
|
|
(42,227 |
) |
|
|
(13,865 |
) |
|
|
|
|
|
|
440 |
|
|
|
|
|
|
|
|
|
|
|
3,775 |
|
|
|
(51,877 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Company |
|
$ |
123,843 |
|
|
$ |
8,054 |
|
|
$ |
(8,335 |
) |
|
$ |
9,755 |
|
|
$ |
(2,868 |
) |
|
$ |
9,902 |
|
|
$ |
3,775 |
|
|
$ |
144,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Company common shareholders per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Company common shareholders per basic share of common stock |
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Company common shareholders per diluted share of common stock |
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average basic shares outstanding |
|
|
131,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average diluted shares outstanding |
|
|
131,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scripps Networks Interactive, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Pro Forma Adjustments |
|
|
|
|
| |
|
Company
Historical(8) |
|
|
N-Vision
Historical(9) |
|
|
Company
Financing(10) |
|
|
N-Vision
Acquisition(11) |
|
|
N-Vision Purchase
Price Allocation(12) |
|
|
N-Vision Debt
Refinancing(13) |
|
|
TVN
Tender Offer(14) |
|
|
Total
Pro Forma |
|
| Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Advertising |
|
$ |
1,816,388 |
|
|
$ |
409,926 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,226,314 |
|
| Network affiliate fees, net |
|
|
799,178 |
|
|
|
65,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
864,435 |
|
| Other |
|
|
49,890 |
|
|
|
26,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating revenues |
|
|
2,665,456 |
|
|
|
501,196 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,166,652 |
|
| Cost of services, excluding depreciation and amortization of intangible assets |
|
|
778,896 |
|
|
|
263,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,042,354 |
|
| Selling, general and administrative |
|
|
764,799 |
|
|
|
75,335 |
|
|
|
|
|
|
|
(1,608 |
) |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
838,526 |
|
| Depreciation |
|
|
72,979 |
|
|
|
21,131 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
94,110 |
|
| Amortization of intangible assets |
|
|
55,603 |
|
|
|
1,356 |
|
|
|
|
|
|
|
|
|
|
|
28,414 |
|
|
|
|
|
|
|
|
|
|
|
85,373 |
|
| Losses (gains) on disposal of property and equipment |
|
|
870 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
|
1,673,147 |
|
|
|
361,280 |
|
|
|
— |
|
|
|
(1,608 |
) |
|
|
28,414 |
|
|
|
— |
|
|
|
— |
|
|
|
2,061,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
992,309 |
|
|
|
139,916 |
|
|
|
— |
|
|
|
1,608 |
|
|
|
(28,414 |
) |
|
|
— |
|
|
|
— |
|
|
|
1,105,419 |
|
| Interest expense, net |
|
|
(52,687 |
) |
|
|
(104,348 |
) |
|
|
(53,774 |
) |
|
|
|
|
|
|
10,166 |
|
|
|
54,346 |
|
|
|
— |
|
|
|
(146,297 |
) |
| Equity in earnings of affiliates |
|
|
85,631 |
|
|
|
9,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,584 |
|
| Miscellaneous, net |
|
|
2,598 |
|
|
|
(23,569 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,971 |
) |
| Loss on retirement of debt |
|
|
— |
|
|
|
(5,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations before income taxes |
|
|
1,027,851 |
|
|
|
16,806 |
|
|
|
(53,774 |
) |
|
|
1,608 |
|
|
|
(18,248 |
) |
|
|
54,346 |
|
|
|
— |
|
|
|
1,028,589 |
|
| Provision for income taxes |
|
|
(301,043 |
) |
|
|
(2,421 |
) |
|
|
19,896 |
|
|
|
(306 |
) |
|
|
6,752 |
|
|
|
(12,500 |
) |
|
|
— |
|
|
|
(289,622 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
726,808 |
|
|
|
14,385 |
|
|
|
(33,878 |
) |
|
|
1,302 |
|
|
|
(11,496 |
) |
|
|
41,846 |
|
|
|
— |
|
|
|
738,967 |
|
| Less: net income attributable to non-controlling interests |
|
|
(181,533 |
) |
|
|
(24,237 |
) |
|
|
|
|
|
|
769 |
|
|
|
|
|
|
|
|
|
|
|
6,599 |
|
|
|
(198,402 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Company |
|
$ |
545,275 |
|
|
$ |
(9,852 |
) |
|
$ |
(33,878 |
) |
|
$ |
2,072 |
|
|
$ |
(11,496 |
) |
|
$ |
41,846 |
|
|
$ |
6,599 |
|
|
$ |
540,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Company common shareholders per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Company common shareholders per basic share of common stock |
|
$ |
3.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to Company common shareholders per diluted share of common stock |
|
$ |
3.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average basic shares outstanding |
|
|
141,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average diluted shares outstanding |
|
|
142,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
| (1) |
Reflects the historical financial position of the Company as of March 31, 2015. |
| (2) |
Reflects the historical financial position of N-Vision as of March 31, 2015, as adjusted for (i) certain reclassifications to conform to the Company’s basis of presentation, (ii) certain adjustments
to conform N-Vision’s financial position prepared in accordance with IFRS to U.S. generally accepted accounting principles (“US GAAP”), and (iii) adjustments to translate the historical financial position of N-Vision from local
currency PLN to US dollar (“USD”) using the end-of-period foreign exchange rate of approximately 3.776 PLN to 1 USD as of March 31, 2015. In addition, in order to facilitate the alignment of financial statement line items between
N-Vision and the Company, certain line items in the N-Vision historical financial statements prepared under IFRS have been combined. |
The adjustments to conform financial information from IFRS to US GAAP reflect the de-recognition of certain liabilities and costs and
related tax consequences recorded by N-Vision in anticipation of the closing of the N-Vision Acquisition, which would not be recognized under US GAAP until the closing of the N-Vision Acquisition actually occurs.
The reclassifications to conform to the Company’s basis of presentation have no effect on the net equity of N-Vision and primarily relate
to (i) reclassifications of non-current deferred tax assets to a current deferred tax asset designation based on the application of US GAAP and when such assets are expected to be realized, (ii) reclassifications of certain assets
classified as intangible assets to property and equipment, and (iii) the reclassification of interest payables and debt-issuance costs classified within debt to other current and non-current assets and liability accounts.
A reconciliation of N-Vision’s financial position as presented in its historical financial statements to its
financial position as presented in the unaudited pro forma condensed combined balance sheet is presented below:
N-Vision B.V.
Consolidated Balance Sheet
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
IFRS
Historical
(in PLN) |
|
|
Reclassification
Adjustments
(in PLN) |
|
|
US GAAP
Adjustments
(in PLN) |
|
|
US GAAP
Historical
Subtotal
(in PLN) |
|
|
US GAAP
Historical
(in USD) |
|
| |
|
(thousands) |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
306,816 |
|
|
|
|
|
|
|
|
|
|
|
306,816 |
|
|
$ |
81,245 |
|
| Short-term investments |
|
|
52,863 |
|
|
|
|
|
|
|
|
|
|
|
52,863 |
|
|
|
13,998 |
|
| Accounts receivable, net of allowances |
|
|
371,861 |
|
|
|
|
|
|
|
|
|
|
|
371,861 |
|
|
|
98,469 |
|
| Programs and program licenses |
|
|
205,554 |
|
|
|
|
|
|
|
|
|
|
|
205,554 |
|
|
|
54,431 |
|
| Deferred income taxes |
|
|
— |
|
|
|
143,212 |
|
|
|
|
|
|
|
143,212 |
|
|
|
37,923 |
|
| Other current assets |
|
|
101,174 |
|
|
|
74,663 |
|
|
|
|
|
|
|
175,837 |
|
|
|
46,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
|
1,038,268 |
|
|
|
217,875 |
|
|
|
— |
|
|
|
1,256,143 |
|
|
|
332,628 |
|
| Investments |
|
|
1,778,212 |
|
|
|
|
|
|
|
|
|
|
|
1,778,212 |
|
|
|
470,871 |
|
| Property and equipment, net of accumulated depreciation |
|
|
355,568 |
|
|
|
40,251 |
|
|
|
|
|
|
|
395,819 |
|
|
|
104,813 |
|
| Goodwill |
|
|
144,127 |
|
|
|
|
|
|
|
|
|
|
|
144,127 |
|
|
|
38,165 |
|
| Other intangible assets, net |
|
|
101,037 |
|
|
|
(40,251 |
) |
|
|
|
|
|
|
60,786 |
|
|
|
16,096 |
|
| Programs and program licenses (less current portion) |
|
|
170,286 |
|
|
|
|
|
|
|
|
|
|
|
170,286 |
|
|
|
45,092 |
|
| Deferred income taxes |
|
|
305,878 |
|
|
|
(143,212 |
) |
|
|
(8,879 |
) |
|
|
153,787 |
|
|
|
40,723 |
|
| Other non-current assets |
|
|
374 |
|
|
|
— |
|
|
|
|
|
|
|
374 |
|
|
|
99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Assets |
|
|
3,893,750 |
|
|
|
74,663 |
|
|
|
(8,879 |
) |
|
|
3,959,534 |
|
|
$ |
1,048,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
|
|
161,933 |
|
|
|
|
|
|
|
|
|
|
|
161,933 |
|
|
$ |
42,880 |
|
| Current portion of debt |
|
|
100,012 |
|
|
|
(79,567 |
) |
|
|
|
|
|
|
20,445 |
|
|
|
5,414 |
|
| Program rights payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
| Customer deposits and unearned revenue |
|
|
|
|
|
|
8,374 |
|
|
|
|
|
|
|
8,374 |
|
|
|
2,217 |
|
| Other accrued liabilities |
|
|
341,984 |
|
|
|
71,193 |
|
|
|
(46,729 |
) |
|
|
366,448 |
|
|
|
97,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
603,929 |
|
|
|
— |
|
|
|
(46,729 |
) |
|
|
557,200 |
|
|
|
147,549 |
|
| Debt (less current portion) |
|
|
3,412,486 |
|
|
|
74,663 |
|
|
|
|
|
|
|
3,487,149 |
|
|
|
923,397 |
|
| Other liabilities (less current portion) |
|
|
37,708 |
|
|
|
— |
|
|
|
|
|
|
|
37,708 |
|
|
|
9,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Liabilities |
|
|
4,054,123 |
|
|
|
74,663 |
|
|
|
(46,729 |
) |
|
|
4,082,057 |
|
|
|
1,080,931 |
|
| Redeemable Non-Controlling Interest |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Equity |
|
|
(160,373 |
) |
|
|
|
|
|
|
37,850 |
|
|
|
(122,523 |
) |
|
|
(32,444 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Redeemable Non-Controlling Interest, Liabilities and Equity |
|
|
3,893,750 |
|
|
|
74,663 |
|
|
|
(8,879 |
) |
|
|
3,959,534 |
|
|
$ |
1,048,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3) |
Pro forma adjustments to record the Company Financing as of March 31, 2015 reflect the following: |
| |
(a) |
An increase in cash and cash equivalents of $1.483 billion to reflect the net proceeds raised; |
| |
(b) |
An increase in other current assets of $1.871 million and other non-current assets of $11.129 million to reflect the debt issuance costs incurred; and |
| |
(c) |
An increase in long-term debt of $1.496 billion to reflect the issuance of $1.5 billion of debt, net of approximately $4.0 million of original issuance discounts. |
| (4) |
Pro forma adjustments to record the N-Vision Acquisition as of March 31, 2015 reflect the following: |
| |
(a) |
A decrease in cash and cash equivalents of $633.655 million, representing the purchase price of approximately €584 million at a foreign currency exchange rate of 1.085 Euros to 1 USD in effect as of
March 31, 2015; |
| |
(b) |
An increase in non-current investments of $633.655 million, reflecting the investment in a wholly owned subsidiary relating to the N-Vision Acquisition; |
| |
(c) |
A net increase in other current accrued liabilities of $17.618 million relating to the accrual of $21.0 million of acquisition-related transaction costs to be incurred at a future date, partially offset by a decrease of
$3.382 million in income taxes payable associated with the deductibility of a portion of the acquisition-related transaction costs; and |
| |
(d) |
A decrease in equity of $17.618 million relating to the after-tax effect of $21.0 million of one-time, acquisition-related transaction costs that are expected to be incurred subsequent to March 31, 2015 and will be
charged to expense as incurred, using an effective statutory tax rate of approximately 16%. As the acquisition-related transaction costs have no continuing impact on the combined entity, those costs have not been reflected in the accompanying
unaudited pro forma condensed combined statements of operations for all periods presented. |
| (5) |
Pro forma adjustments to record the purchase price accounting in accordance with ASC 805 for the N-Vision Acquisition reflect the following preliminary allocation: |
| |
(a) |
A decrease in other current assets of $19.539 million to write off the net book value of historical debt issuance costs in connection with the remeasurement of debt to fair value; |
| |
(b) |
A decrease in non-current investments of $633.655 million to eliminate the investment in the wholly owned subsidiary holding the interest in N-Vision as a result of the allocation of the purchase price to the underlying
net assets of N-Vision; |
| |
(c) |
A net increase in goodwill of $1.114 billion consisting of: |
| |
(i) |
a decrease relating to the write off of N-Vision’s historical goodwill of approximately $38 million; and |
| |
(ii) |
an increase representing the excess of the purchase price over the fair value of N-Vision’s net assets of $1.152 billion. |
| |
(d) |
A net increase in other intangible assets of $808.904 million consisting of: |
| |
(i) |
a decrease relating to the write off of N-Vision’s historical identifiable intangible assets of $16.096 million; |
| |
(ii) |
an increase relating to finite-lived, customer relationships of $70 million; |
| |
(iii) |
an increase relating to indefinite-lived, brands and trademarks of $300 million; |
| |
(iv) |
an increase relating to finite-lived, brands and trademarks of $55 million; |
| |
(v) |
an increase relating to finite-lived, acquired network distribution rights of $150 million; and |
| |
(vi) |
an increase relating to finite-lived, broadcast licenses of $250 million. |
| |
(e) |
An increase in long-term debt of $127 million to reflect such debt securities at fair value; |
| |
(f) |
An increase in non-current deferred tax liabilities classified as a component of other non-current liabilities of $257.815 million, primarily related to the incremental book-tax basis differences arising from the
revaluation of the net assets acquired in the N-Vision Acquisition for book purposes; and |
| |
(g) |
An increase in equity of $884.769 million consisting of: |
| |
(i) |
an increase of $32.444 million relating to the elimination of the historical equity of N-Vision, which was in a deficit position; and |
| |
(ii) |
an increase of $852.325 million relating to recording the public, non-controlling interest in TVN at fair value. |
The pro forma purchase price allocation presented above has been developed based on preliminary estimates of fair value using the historical
financial statements and information of N-Vision as of March 31, 2015. In addition, the allocation of the purchase price to the acquired identifiable assets and assumed liabilities is based on the preliminary valuation of the identifiable
intangible assets acquired and debt obligations assumed. The fair value of all other tangible assets acquired and liabilities assumed was presumed by the Company’s management to approximate their respective net book values as of March 31,
2015 in order to prepare the unaudited pro forma condensed combined financial information.
The final allocation of the purchase price will
be determined at a later date and is dependent on a number of factors, including the final valuation of the tangible and identifiable intangible assets acquired and liabilities assumed as of the closing date of the N-Vision Acquisition. As such, the
purchase price allocation may change upon the receipt of additional and more detailed information, and such changes could result in a material change to the unaudited pro forma condensed combined financial information.
| (6) |
Pro forma adjustments to record the N-Vision Debt Refinancing as of March 31, 2015 reflect the following: |
| |
(a) |
A decrease in cash and cash equivalents of $578.693 million relating to the use of cash to fund the aggregate redemption cost of the €453 million principal amount of N-Vision Assumed Debt Securities to be
redeemed (including the payment of accrued interest), based on foreign currency exchange rates of 1.085 Euros to 1 USD in effect as of March 31, 2015; |
| |
(b) |
A decrease in other current accrued liabilities of $11.693 million consisting of the payment of accrued interest in connection with the redemption of the N-Vision Assumed Debt Securities; and |
| |
(c) |
A decrease in long-term debt of $567.0 million to reflect the redemption of the N-Vision Assumed Debt Securities. |
| (7) |
Pro forma adjustments to record the TVN Tender Offer as of March 31, 2015 reflect the following: |
| |
(a) |
A decrease in cash and cash equivalents of $241.660 million consisting of the $239.660 million purchase price expected to be paid in connection with the TVN Tender Offer, based on the acquisition of approximately
45.3 million shares at an assumed purchase price of 20.00 PLN per share translated at a foreign currency exchange rate of 3.776 PLN per 1 USD in effect as of March 31, 2015, plus the payment of $2 million of transaction-related costs; and
|
| |
(b) |
A decrease in equity of $241.660 million to reduce the 13.3% non-controlling interest in TVN acquired, including $2 million of transaction-related costs. |
| (8) |
Reflects the historical operating results of the Company for the three-month period ended March 31, 2015 and the fiscal year ended December 31, 2014. |
| (9) |
Reflects the historical operating results of N-Vision for the three-month period ended March 31, 2015 and the fiscal year ended December 31, 2014, each as adjusted for (i) certain reclassifications to
conform to the Company’s basis of presentation, (ii) certain adjustments to conform N-Vision’s operating results prepared in accordance with IFRS to US GAAP, and (iii) adjustments to translate the historical operating
results of N-Vision from local currency PLN to USD using the average foreign currency exchange rate for the period of approximately 3.719 PLN to 1 USD for the three-month period ended March 31, 2015 and 3.18 PLN to 1 USD for the year ended
December 31, 2014. In addition, in order to facilitate the alignment of financial statement line items between N-Vision and the Company, certain line items in the N-Vision historical financial statements prepared under IFRS have been combined.
|
The reclassifications to conform to the Company’s basis of presentation have no effect on net income and primarily
relate to (i) reclassifications of depreciation and amortization expense to separately presented line items, (ii) reclassifications of income from associates and joint ventures accounted for under the equity method from above operating
income to below operating income, and (iii) the reclassification of incremental costs related to the N-Vision Acquisition to a component within selling, general and administrative expenses.
The adjustments to conform financial information from IFRS to US GAAP reflect the de-recognition of certain liabilities, costs and related
tax consequences recorded by N-Vision in anticipation of the closing of the N-Vision Acquisition, which would not be recognized under US GAAP until the closing of the N-Vision Acquisition actually occurs.
A reconciliation of N-Vision’s operating results as presented in its historical financial statements to its
operating results as presented in the unaudited pro forma condensed combined statements of operations is presented below:
N-Vision B.V.
Consolidated Statement of Operations
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
IFRS
Historical
(in PLN) |
|
|
Reclassification
Adjustments
(in PLN) |
|
|
US GAAP
Adjustments
(in PLN) |
|
|
US GAAP
Historical Subtotal
(in PLN) |
|
|
US GAAP
Historical
(in USD) |
|
| |
|
(thousands) |
|
| Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Advertising |
|
|
292,505 |
|
|
|
|
|
|
|
|
|
|
|
292,505 |
|
|
$ |
78,655 |
|
| Network affiliate fees, net |
|
|
52,306 |
|
|
|
|
|
|
|
|
|
|
|
52,306 |
|
|
|
14,065 |
|
| Other |
|
|
18,122 |
|
|
|
|
|
|
|
|
|
|
|
18,122 |
|
|
|
4,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Operating Revenues |
|
|
362,933 |
|
|
|
|
|
|
|
— |
|
|
|
362,933 |
|
|
|
97,593 |
|
| Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of services |
|
|
220,719 |
|
|
|
(12,381 |
) |
|
|
|
|
|
|
208,338 |
|
|
|
56,022 |
|
| Selling, general, and administrative expenses |
|
|
68,326 |
|
|
|
11,250 |
|
|
|
(14,580 |
) |
|
|
64,996 |
|
|
|
17,478 |
|
| Depreciation |
|
|
— |
|
|
|
16,597 |
|
|
|
|
|
|
|
16,597 |
|
|
|
4,463 |
|
| Amortization of intangible assets |
|
|
— |
|
|
|
1,017 |
|
|
|
|
|
|
|
1,017 |
|
|
|
274 |
|
| Share of (profits)/ losses of associates and joint ventures |
|
|
(15,895 |
) |
|
|
15,895 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
| Losses (gains) on disposal of property and equipment |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
| Incremental costs related to the potential change of control transaction |
|
|
15,953 |
|
|
|
(15,953 |
) |
|
|
|
|
|
|
— |
|
|
|
— |
|
| Other operating expenses, net |
|
|
531 |
|
|
|
(531 |
) |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Operating Expenses |
|
|
289,634 |
|
|
|
15,894 |
|
|
|
(14,580 |
) |
|
|
290,948 |
|
|
|
78,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
|
|
73,299 |
|
|
|
(15,894 |
) |
|
|
14,580 |
|
|
|
71,985 |
|
|
|
19,356 |
|
| Interest expense, net |
|
|
(79,794 |
) |
|
|
— |
|
|
|
|
|
|
|
(79,794 |
) |
|
|
(21,457 |
) |
| Equity in earnings of affiliates |
|
|
— |
|
|
|
15,894 |
|
|
|
|
|
|
|
15,894 |
|
|
|
4,274 |
|
| Miscellaneous, net |
|
|
91,350 |
|
|
|
|
|
|
|
|
|
|
|
91,350 |
|
|
|
24,564 |
|
| Loss on retirement of debt |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations before income taxes |
|
|
84,855 |
|
|
|
— |
|
|
|
14,580 |
|
|
|
99,435 |
|
|
|
26,737 |
|
| Provision for income taxes |
|
|
(15,147 |
) |
|
|
|
|
|
|
(2,770 |
) |
|
|
(17,917 |
) |
|
|
(4,818 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
69,708 |
|
|
|
— |
|
|
|
11,810 |
|
|
|
81,518 |
|
|
|
21,919 |
|
| Less: net income attributable to non-controlling interests |
|
|
51,561 |
|
|
|
|
|
|
|
|
|
|
|
51,561 |
|
|
|
13,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to N-Vision |
|
|
18,147 |
|
|
|
— |
|
|
|
11,810 |
|
|
|
29,957 |
|
|
$ |
8,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N-Vision B.V.
Consolidated Statement of Operations
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
IFRS
Historical
(in PLN) |
|
|
Reclassification
Adjustments
(in PLN) |
|
|
US GAAP
Adjustments
(in PLN) |
|
|
US GAAP
Historical Subtotal
(in PLN) |
|
|
US GAAP
Historical
(in USD) |
|
| |
|
(thousands) |
|
| Operating Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Advertising |
|
|
1,303,566 |
|
|
|
|
|
|
|
|
|
|
|
1,303,566 |
|
|
$ |
409,926 |
|
| Network affiliate fees, net |
|
|
207,518 |
|
|
|
|
|
|
|
|
|
|
|
207,518 |
|
|
|
65,257 |
|
| Other |
|
|
82,720 |
|
|
|
|
|
|
|
|
|
|
|
82,720 |
|
|
|
26,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Operating Revenues |
|
|
1,593,804 |
|
|
|
|
|
|
|
— |
|
|
|
1,593,804 |
|
|
|
501,196 |
|
| Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of services |
|
|
886,184 |
|
|
|
(48,386 |
) |
|
|
|
|
|
|
837,798 |
|
|
|
263,458 |
|
| Selling, general, and administrative expenses |
|
|
254,511 |
|
|
|
17,204 |
|
|
|
(32,149 |
) |
|
|
239,566 |
|
|
|
75,335 |
|
| Depreciation |
|
|
|
|
|
|
67,195 |
|
|
|
|
|
|
|
67,195 |
|
|
|
21,131 |
|
| Amortization of intangible assets |
|
|
|
|
|
|
4,312 |
|
|
|
|
|
|
|
4,312 |
|
|
|
1,356 |
|
| Share of (profits)/ losses of associates and joint ventures |
|
|
(31,651 |
) |
|
|
31,651 |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
| Losses (gains) on disposal of property and equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
| Incremental costs related to the potential change of control transaction |
|
|
37,263 |
|
|
|
(37,263 |
) |
|
|
|
|
|
|
— |
|
|
|
— |
|
| Other operating expenses, net |
|
|
3,062 |
|
|
|
(3,062 |
) |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Operating Expenses |
|
|
1,149,369 |
|
|
|
31,651 |
|
|
|
(32,149 |
) |
|
|
1,148,871 |
|
|
|
361,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
|
|
444,435 |
|
|
|
(31,651 |
) |
|
|
32,149 |
|
|
|
444,933 |
|
|
|
139,916 |
|
| Interest expense, net |
|
|
(348,190 |
) |
|
|
16,364 |
|
|
|
|
|
|
|
(331,826 |
) |
|
|
(104,348 |
) |
| Equity in earnings of affiliates |
|
|
|
|
|
|
31,651 |
|
|
|
|
|
|
|
31,651 |
|
|
|
9,953 |
|
| Miscellaneous, net |
|
|
(74,951 |
) |
|
|
— |
|
|
|
|
|
|
|
(74,951 |
) |
|
|
(23,569 |
) |
| Loss on retirement of debt |
|
|
— |
|
|
|
(16,364 |
) |
|
|
|
|
|
|
(16,364 |
) |
|
|
(5,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations before income taxes |
|
|
21,294 |
|
|
|
— |
|
|
|
32,149 |
|
|
|
53,443 |
|
|
|
16,806 |
|
| Provision for income taxes |
|
|
(1,592 |
) |
|
|
|
|
|
|
(6,108 |
) |
|
|
(7,700 |
) |
|
|
(2,421 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
19,702 |
|
|
|
— |
|
|
|
26,041 |
|
|
|
45,743 |
|
|
|
14,385 |
|
| Less: net income attributable to non-controlling interests |
|
|
77,074 |
|
|
|
|
|
|
|
|
|
|
|
77,074 |
|
|
|
24,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to N-Vision |
|
|
(57,372 |
) |
|
|
— |
|
|
|
26,041 |
|
|
|
(31,331 |
) |
|
$ |
(9,852 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (10) |
Pro forma adjustments to record the Company Financing for the periods presented reflect the following: |
For the three-month period ended March 31, 2015
| |
(a) |
An increase in interest expense of $13.444 million consisting of: |
| |
(i) |
an increase in interest expense of $4.200 million relating to the $600 million in aggregate principal amount of 2020 Notes at an interest rate of 2.800%; |
| |
(ii) |
an increase in interest expense of $3.500 million relating to the $400 million in aggregate principal amount of 2022 Notes at an interest rate of 3.500%; |
| |
(iii) |
an increase in interest expense of $4.938 million relating to the $500 million in aggregate principal amount of 2025 Notes at an interest rate of 3.950%; |
| |
(iv) |
a net increase in interest expense of $0.175 million relating to the $1.350 million of annual commitment fees payable on the $900 million of availability under the Amended Revolving Credit Facility at a 0.15% rate,
partially offset by the elimination of $0.650 million of annual commitment fees payable on the $650 million of availability under the Old Revolving Credit Facility at a 0.10% rate; |
| |
(v) |
an increase in interest expense of $0.167 million related to the amortization of the aggregate $4 million original issuance discount expected in connection with the Public Debt Financing over a weighted-average
contractual life of approximately 6 years; and |
| |
(vi) |
an increase in interest expense of $0.464 million related to the amortization of an aggregate $13 million of debt issuance costs expected to be incurred over a weighted-average contractual life of approximately 7 years;
|
| |
(b) |
A decrease in the provision for income taxes for the three-month period of $5.109 million related to the $13.444 million aggregate effect on pretax income from the aforementioned pro forma adjustments, at an effective
statutory tax rate of 38%. |
For the year ended December 31, 2014
| |
(a) |
An increase in interest expense of $53.774 million consisting of: |
| |
(i) |
an increase in interest expense of $16.800 million relating to the $600 million in aggregate principal amount of 2020 Notes at an interest rate of 2.800%; |
| |
(ii) |
an increase in interest expense of $14.000 million relating to the $400 million in aggregate principal amount of 2022 Notes at an interest rate of 3.500%; |
| |
(iii) |
an increase in interest expense of $19.750 million relating to the $500 million in aggregate principal amount of 2025 Notes at an interest rate of 3.950%; |
| |
(iv) |
a net increase in interest expense of $0.7 million relating to the $1.350 million of annual commitment fees payable on the $900 million of availability under the Amended Revolving Credit Facility at a 0.15% rate,
partially offset by the elimination of $0.650 million of annual commitment fees payable on the $650 million of availability under the Old Revolving Credit Facility at a 0.10% rate; |
| |
(v) |
an increase in interest expense of $0.667 million related to the amortization of the aggregate $4 million original issuance discount expected in connection with the Public Debt Financing over a weighted-average
contractual life of approximately 6 years; and |
| |
(vi) |
an increase in interest expense of $1.857 million related to the amortization of an aggregate $13 million of debt issuance costs expected to be incurred over a weighted-average contractual life of approximately 7 years;
|
| |
(b) |
A decrease in the provision for income taxes for the year of $19.896 million related to the $53.774 million aggregate effect on pretax income from the aforementioned pro forma adjustments, at an effective statutory tax
rate of 37%. |
| (11) |
Pro forma adjustments to record the N-Vision Acquisition for the periods presented reflect the following: |
| |
(a) |
A decrease in selling, general and administrative costs relating to the elimination of acquisition-related transaction costs of $10.545 million for the three-month period ended March 31, 2015 and $1.608 million for
the year ended December 31, 2014, as such costs were one-time in nature and did not have a continuing impact on the combined entity; |
| |
(b) |
An increase in the income tax provision relating to the elimination of the tax benefit on acquisition-related transaction costs of $1.230 million for the three-month period ended March 31, 2015 and $0.306 million
for the year ended December 31, 2014. Such amounts were calculated using effective statutory tax rates of approximately 12% for the three-month period ended March 31, 2015 and 19% for the year ended December 31, 2014 based on the
statutory tax rates in effect in the jurisdictions where such costs were incurred; |
| |
(c) |
A decrease of $0.440 million in net income attributable to non-controlling interests for the three-month period ended March 31, 2015 and $0.769 million for the year ended December 31, 2014, as a portion of
such non-controlling interests in TVN held directly by one of the Sellers (and contributed to N-Vision immediately preceding the closing of the N-Vision Acquisition) was purchased by the Company; and |
| |
(d) |
Acquisition-related transaction costs of $21 million expected to be incurred subsequent to March 31, 2015 have not been reflected in the accompanying pro forma condensed combined statements of operations for all
periods presented. Those costs are also one-time in nature and are not expected to have any continuing impact on the combined entity. |
| (12) |
Pro forma adjustments to record the preliminary allocation of purchase price accounting for the N-Vision Acquisition for the periods presented are as follows: |
For the three-month period ended March 31, 2015
| |
(a) |
A net increase in amortization expense of $7.168 million consisting of: |
| |
(i) |
the elimination of $0.274 million of historical amortization expense to write off N-Vision’s historical net book value of identifiable intangible assets, which will be reestablished in the purchase accounting to
reflect such identifiable intangible assets at their respective fair values; |
| |
(ii) |
an increase in amortization expense of $2.227 million relating to the $70 million fair value of finite-lived, customer relationships, over a weighted-average useful life of approximately 8 years on a straight-line
basis; |
| |
(iii) |
an increase in amortization expense of $0.840 million relating to the $55 million fair value of finite-lived brands and trademarks, over a weighted-average useful life of approximately 16 years on a straight-line basis;
|
| |
(iv) |
an increase in amortization expense of $1.875 million relating to the $150 million fair value of finite-lived, acquired network distribution rights, over a weighted-average useful life of 20 years on a straight-line
basis; and |
| |
(v) |
an increase in amortization expense of $2.5 million relating to the $250 million fair value of, finite-lived, broadcast licenses over a weighted-average useful life of 25 years on a straight-line basis.
|
| |
(b) |
A net decrease in interest expense of $2.542 million relating to the amortization of the $50.831 million adjustment to reflect a portion of the N-Vision Assumed Debt Securities at fair value over a remaining average
life of 5 years. This portion of the N-Vision Assumed Debt Securities will remain outstanding after the N-Vision Debt Refinancing; and |
| |
(c) |
A decrease in the provision for income taxes of $1.758 million related to the $4.626 million aggregate effect on pretax income from the aforementioned pro forma adjustments, at an effective statutory tax rate of 38%.
|
For the year ended December 31, 2014
| |
(a) |
A net increase in amortization expense of $28.414 million consisting of: |
| |
(i) |
the elimination of $1.356 million of historical amortization expense to write off N-Vision’s historical net book value of identifiable intangible assets, which will be reestablished in the purchase accounting to
reflect such identifiable intangible assets at their respective fair values; |
| |
(ii) |
an increase in amortization expense of $8.909 million relating to the $70 million fair value of finite-lived, customer relationships, over a weighted-average useful life of approximately 8 years on a straight-line
basis; |
| |
(iii) |
an increase in amortization expense of $3.361 million relating to the $55 million fair value of finite-lived, brands and trademarks, over a weighted-average useful life of approximately 16 years on a straight-line
basis; |
| |
(iv) |
an increase in amortization expense of $7.500 million relating to the $150 million fair value of finite-lived, acquired network distribution rights, over a weighted-average useful life of 20 years on a straight-line
basis; and |
| |
(v) |
an increase in amortization expense of $10 million relating to the $250 million fair value of finite-lived, broadcast licenses over a weighted-average useful life of 25 years on a straight-line basis. |
| |
(b) |
A net decrease in interest expense of $10.166 million relating to the amortization of the $50.831 million adjustment to reflect a portion of the N-Vision Assumed Debt Securities at fair value over a remaining average
life of 5 years. This portion of the N-Vision Assumed Debt Securities will remain outstanding after the N-Vision Debt Refinancing; and |
| |
(c) |
A decrease in the provision for income taxes of $6.752 million related to the $18.248 million aggregate effect on pretax income from the aforementioned pro forma adjustments, at an effective statutory tax rate of 37%.
|
| (13) |
Pro forma adjustments to record the N-Vision Debt Refinancing for the periods presented reflect the following: |
| |
(a) |
A decrease in interest expense of $12.860 million for the three-month period ended March 31, 2015 and $54.346 million for the year ended December 31, 2014 to eliminate the historical interest expense relating
to the N-Vision Assumed Debt Securities redeemed; and |
| |
(b) |
An increase in the provision for income taxes of $2.958 million for the three-month period ended March 31, 2015 and $12.500 million for the year ended December 31, 2014 related to the aforementioned pro forma
reduction in interest expense, at effective statutory tax rates of 23% for both periods. |
| (14) |
Pro forma adjustments to record the TVN Tender Offer for the periods presented reflect the following: |
A decrease of $3.775 million in net income attributable to non-controlling interests for the three-month period ended March 31, 2015 and
$6.599 million for the year ended December 31, 2014, as the 13.3% non-controlling interest in TVN is expected to be purchased by the Company.
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