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HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
• 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.
Competing Offers
During the period when Liberty continues to have the right to nominate directors to HSNi’s Board of
Directors, if the Board of Directors determines to pursue certain types of transactions on a negotiated basis
(either through an “auction” or with a single bidder), Liberty is granted certain rights to compete with the bidder
or bidders, including the right to receive certain notices and information, subject to specified conditions and
limitations. In connection with any such transaction that HSNi is negotiating with a single bidder, the Board of
Directors must consider any offer for a transaction made in good faith by Liberty but is not obligated to accept
any such offer or to enter into negotiations with Liberty.
If a third party (x) commences a tender or exchange offer for at least 35% of the capital stock of HSNi other
than pursuant to an agreement with HSNi or (y) publicly discloses that its ownership percentage (based on voting
power) exceeds 20% and HSNi’s Board fails to take certain actions to block such third party from acquiring an
ownership percentage of HSNi (based on voting power) exceeding the Applicable Percentage, the Liberty Parties
generally will be relieved of the obligations described under “Standstill Restrictions” and “Acquisition
Restrictions” above to the extent reasonably necessary to permit Liberty to commence and consummate a
competing offer. If Liberty’s ownership percentage (based on voting power) as a result of the consummation of a
competing offer in response to a tender or exchange offer described in (x) above exceeds 50%, any consent or
approval requirements of the Qualified Directors in the Spinco Agreement will be terminated, and, following the
later of the second anniversary of the Spin-off and the date that Liberty’s ownership percentage (based on voting
power) exceeds 50%, the obligations described under “Acquisition Restrictions” will be terminated.
Other
Following the Spin-off, amendments to the Spinco Agreement and determinations required to be made
thereunder (including approval of transactions between a Liberty Party and HSNi that would be reportable under
the proxy rules) will require the approval of the Qualified Directors.
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