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Table of Contents
HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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”):
HSNi has satisfied its obligations under the Separation and Distribution Agreement, Employee Matters Agreement and Transition Services
Agreement. HSNi continues to be subject to certain post-spin obligations under the Tax Sharing Agreement.
Relationship Between Liberty Media Corporation and HSNi After the Spin-off
Spinco Agreement
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 held 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. Following is a summary of the
material terms of the 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
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•
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.