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Table of Contents
HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
Acquisition Restrictions
The Liberty Parties have agreed not to acquire beneficial ownership of any equity securities of HSNi (with specified exceptions) unless:
The “Applicable Percentage” is Liberty’s ownership percentage upon the spin-off of HSNi, based on voting power (approximately 30%),
plus 5%, but in no event more than 35%. Following the spin-off, the Applicable Percentage for the Spinco will be reduced for specified transfers
of equity securities of the Spinco by the Liberty Parties. During the first two years following the spin-off, acquisitions by the Liberty Parties are
further limited to specified extraordinary transactions and, otherwise, to acquisitions representing no more than one-third of HSNi Common
Stock received by the Liberty Parties in the spin-off.
Transfer Restrictions
Unless a majority of the Qualified Directors consent, the Spinco Agreement prohibits transfers by the Liberty Parties of any equity
securities of HSNi to any person except for certain transfers, including:
70
•
the acquisition was approved by a majority of the Qualified Directors;
•
the acquisition is permitted under the provisions described in
“
Competing Offers
”
below; or
•
after giving effect to the acquisition, Liberty’s ownership percentage of the equity securities of HSNi, based on voting power, would
not exceed the Applicable Percentage.
•
transfers under Rule 144 under the Securities Act (or, if Rule 144 is not applicable, in
“
broker transactions
”
);
•
transfers pursuant to a third party tender or exchange offer or in connection with any merger or other business combination, which
merger or business combination has been approved by HSNi;
•
transfers in a public offering in a manner designed to result in a wide distribution, provided that no such transfer is made, to the
knowledge of the Liberty Parties, to any person whose ownership percentage (based on voting power) of HSNi’s equity securities,
giving effect to the transfer, would exceed 15%;
•
a transfer of all of the equity securities of HSNi beneficially owned by the Liberty Parties and their affiliates in a single transaction if
the transferee’s ownership percentage (based on voting power), after giving effect to the transfer, would not exceed the Applicable
Percentage and only if the transferee assumes all of the rights and obligations (subject to limited exceptions) of the Liberty Parties
under the Spinco Agreement;
•
specified transfers in connection with changes in the beneficial ownership of the ultimate parent company of a Liberty Party or a
distribution of the equity interests of a Liberty Party or certain similar events; and
•
specified transfers relating to certain hedging transactions or stock lending transactions in respect of the Liberty Parties’ equity
securities in HSNi, subject to specified restrictions.