Home Shopping Network 2012 Annual Report Download - page 66

Table of Contents
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:
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.
Registration Rights Agreement
Under the registration rights agreement, the Liberty Parties and their permitted transferees (the “Holders”) will be entitled to three demand
registration rights (and unlimited piggyback registration rights) in respect of the shares of HSNi common stock received by the Liberty Parties as
a result of the Spin-off and other shares of HSNi common stock acquired by the Liberty Parties consistent with the Spinco Agreement
(collectively, the “Registrable Shares”). The Holders will be permitted to exercise their registration rights in connection with certain hedging
transactions that they may enter into with respect to the Registrable Shares.
HSNi will be obligated to indemnify the Holders, and each selling Holder will be obligated to indemnify HSNi, against specified liabilities
in connection with misstatements or omissions in any registration statement.
58
• 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.