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HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Relationship Between Liberty Media Corporation and HSNi
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 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.
Acquisition Restrictions
The Liberty Parties have agreed not to acquire beneficial ownership of any equity securities of HSNi (with
specified exceptions) unless:
• 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.
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%. Notwithstanding the foregoing, Liberty’s
beneficial ownership may increase above the Applicable Percentage as a result of HSNi’s share repurchase
program. Following the Spin-off, the Applicable Percentage for the Spinco is 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 were 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.
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