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HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
66
Relationship Between IAC and HSNi After the Spin-off
For purposes of governing certain of the ongoing relationships between HSNi and IAC at and after the
spin-off and to provide for an orderly transition, effective August 20, 2008, HSNi entered into the following
agreements (collectively, the “Spin-Off Agreements”):
• a Separation and Distribution Agreement that sets forth the arrangements between IAC and HSNi
regarding the principal transactions necessary to separate HSNi from IAC, and that governs certain
aspects of the relationship of HSNi with IAC and the other Spincos after the spin-off;
• a Tax Sharing Agreement that governs the respective rights, responsibilities and obligations of IAC
and HSNi after the Spin-Off with respect to tax periods ending on or before the spin-off, including tax
liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, other taxes
and related tax returns;
• an Employee Matters Agreement that covers a wide range of compensation and benefit issues,
including the allocation among IAC and HSNi of responsibility for the employment and benefit
obligations and liabilities of each company’s current and former employees (and their dependents and
beneficiaries), as well as the provision of health and welfare benefits to employees of HSNi (the costs
of which will be borne by HSNi) pursuant to IAC’s employee benefit plans through the end of 2008;
and
• a Transition Services Agreement that governs the provision of transition services among IAC and
HSNi.
Also in connection with the spin-off, pursuant to a Spinco Assignment and Assumption Agreement (the
“Spinco Agreement”), dated as of August 20, 2008, among HSNi, IAC, Liberty Media Corporation (“Liberty”) and
a subsidiary of Liberty that holds shares of IAC common stock and IAC Class B common stock (together with
Liberty, the “Liberty Parties”), HSNi (i) assumed from IAC all rights and obligations providing for post-spin-off
governance and other arrangements at HSNi under the Spinco Agreement, dated May 13, 2008, among IAC, Liberty
and affiliates of Liberty that held shares of IAC common stock and/or Class B common stock at the time such
Spinco Agreement was entered into, and (ii) as required by the Spinco Agreement, entered into a registration rights
agreement with the Liberty Parties.
Relationship Between Liberty Media Corporation and HSNi After the Spin-off
Spinco Agreement
Representation of Liberty on the Spinco Boards of Directors
The Spinco Agreement generally provides that so long as Liberty beneficially owns securities of HSNi
representing at least 20% of the total voting power of the HSNi’s equity securities, Liberty has the right to nominate
up to 20% of the directors serving on HSNi’s Board of Directors (rounded up to the nearest whole number). Any
director nominated by Liberty must be reasonably acceptable to a majority of the directors on HSNi’s Board who
were not nominated by Liberty. All but one of Liberty’s nominees serving on the Board of Directors must qualify as
“independent” under applicable stock exchange rules. In addition, the Nominating Committee of the Board may
include only “Qualified Directors,” namely directors other than any who were nominated by Liberty, are officers or
employees of HSNi or were not nominated by the Nominating Committee of the HSNi’ Board in their initial
election to the Board and for whose election any Liberty Party voted shares.
Until the second anniversary of the spin-off, the Liberty Parties agreed to vote all of the equity securities of
HSNi beneficially owned by them in favor of the election of the full slate of director nominees recommended to
stockholders by the HSNi Board of Directors so long as the slate includes the director-candidates that Liberty has
the right to nominate.