Exhibit 10.5


 


EXECUTION COPY


 


EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT (“Agreement”), dated as of July 29, 2008, is entered
into by and between Mindy Grossman (“Executive”) and HSN, Inc. (the “Company”).


 


WHEREAS,
Executive is currently serving as CEO of IAC Retailing, a business segment of
IAC/InterActiveCorp (“IAC”), a Delaware corporation, and the parent company of
the Company as of the date of this Agreement;


 


WHEREAS,
the Company and Executive expect that IAC will cause the Company to become a separate
public entity (the “HSN Spin-Off”);


 


WHEREAS,
the Company desires to establish the Company’s right to the services of
Executive for a period beginning on the date the HSN Spin-Off occurs (the “Effective
Date”), in the capacity described below, on the terms and conditions
hereinafter set forth, and Executive is willing to accept such employment on
such terms and conditions;


 


WHEREAS,
Executive and IAC are parties to an employment agreement (the “Prior Agreement”),
with an effective date of May 1, 2006, which the parties intend will be
superseded hereby; and


 


WHEREAS,
in order to effect the foregoing, the Company and Executive wish to enter into
an employment agreement on the terms and conditions set forth below.


 


NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth,
Executive and the Company have agreed and do hereby agree as follows:


 


1A.                             EMPLOYMENT.  During the Term (as defined below), the
Company shall employ Executive, and Executive shall be employed, as Chief
Executive Officer of the Company.  During
the Term, Executive shall do and perform all services and acts necessary or
advisable to fulfill the duties and responsibilities as are commensurate and
consistent with Executive’s position and shall render such services on the
terms set forth herein.  During the Term,
Executive shall report directly to the Board of Directors of the Company (the “Board”).  Executive shall be the senior executive
dedicated to the businesses of the Company and as such shall have primary
responsibility for the management of all operations and activities of the
businesses of the Company.  Executive
agrees to devote all of Executive’s working time, attention and efforts to the
Company and to perform the duties of Executive’s position in accordance with
the Company’s policies as in effect from time to time and communicated to
Executive.  Executive may (i) serve
on corporate, civic or charitable boards, (ii) manage personal investments
and (iii) deliver lectures and fulfill speaking engagements, so long as (A) these
activities do not interfere with Executive’s qualitative performance of her
responsibilities under this Agreement, (B) do not conflict with any
applicable Company policy on conduct, including conflicts of interest, and (C) any
service on a corporate, for-profit board is approved in advance by the
Board.  As of the date first written
above, Executive serves on the Board of The East Harlem School at Exodus House
and the Wharton Retail Advisory Board, and the Company hereby approves such
service and


 


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agrees that Executive may continue such
service so long as such service is otherwise in accordance with the preceding
sentence.  The Company further approves
Executive’s service on the Board of the National Retail Federation.  Executive’s principal place of employment
shall be New York, New York, with substantial and regular travel outside of New
York to the various businesses for which Executive is responsible, principally
to St. Petersburg, Florida, and Executive acknowledges that it may be
necessary, depending on the circumstances, that she spend the majority of her
time outside of New York.


 


2A.                             TERM.  Subject to Section 10A
hereof, the terms and conditions of this Agreement shall commence on the Effective
Date and, unless a longer period is otherwise provided herein, shall continue
through January 31, 2012 (the “Initial Term”); provided, however,
that at the end of the Initial Term and on each succeeding anniversary thereof,
the employment of Executive will be automatically continued upon the terms and
conditions set forth herein for one additional year (each, a “Renewal Term”),
unless either party to this Agreement gives the other party written notice (in
accordance with Section 4A) of such party’s intention to terminate this
Agreement and the employment of Executive at least ninety (90) days prior to
the end of such initial or extended term. 
For purposes of this Agreement, the Initial Term and any Renewal Term
shall collectively be referred to as the “Term.”


 


3A.                             COMPENSATION.


 


(a)                                  BASE
SALARY.  During the period that
Executive is employed with the Company hereunder, the Company shall pay
Executive an annual base salary of $1,000,000 (the “Base Salary”), payable in
equal biweekly installments or in accordance with the Company’s payroll
practice as in effect from time to time. 
For all purposes under this Agreement, the term “Base Salary” shall
refer to the Base Salary as in effect from time to time.  The Base Salary is subject to increase, but
not decrease, in the sole discretion of the Compensation and Human Resources
Committee (or such other committee responsible for compensation and related
matters) of the Board of Directors of the Company (the “Compensation Committee”).


 


(b)                                 ANNUAL
BONUS.  During the Term, Executive
shall be eligible to receive an annual cash bonus (the “Bonus”) in respect of
each fiscal year of the Company ending during the Term (a “Fiscal Year”).  The Bonus shall have a high performance
target of 100% of the Base Salary (the “Target Bonus”), with the actual amount
determined in the sole discretion of the Compensation Committee, based on the
factors it deems relevant with respect to any particular year, which may
include, among other factors, the performance of the Company and its
subsidiaries, as applicable, against pre-established performance criteria
(including their competition, their prior year results, the achievement of
established initiatives, etc.), and the contribution and performance of
Executive.   Bonus payments in respect of
any Fiscal Year shall be made to Executive no later than the 15th day of the
third month following the close of such Fiscal Year unless Executive shall
elect to defer the receipt of such Bonus pursuant to an arrangement that meets
the requirements of Section 409A (as defined below).


 


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(c)                                  LONG
TERM INCENTIVE PLAN.               In
addition to and not in lieu of the Bonus that Executive is eligible to receive
pursuant to Section 3A(b) of this Agreement, Executive and the
Company hereby agree to the long term incentive plan set forth on Exhibit A
hereto.


 


(d)                                 INITIAL EQUITY AWARDS.  On
the Effective Date, Executive shall be granted three separate options to
acquire shares of common stock of the Company (“Common Stock”).  Each option shall vest annually in equal
installments over four years, subject to Executive’s continued employment with
the Company through the applicable vesting date, and otherwise shall be subject
to the terms and conditions of the Company equity plan (the “Equity Plan”) and
applicable award agreement.  The per
share exercise price of the options shall be established at the time of grant
as follows:


 


(i)                                     Option
1: Exercise price = $2.1 billion minus the Initial Debt divided by the Share
Count;


 


(ii)                                  Option
2: Exercise price = $2.5 billion minus the Initial Debt divided by the Share
Count; and


 


(iii)                               Option
3: Exercise price = $2.9 billion minus the Initial Debt divided by the Share
Count.


 


Notwithstanding the foregoing, in the event any of the foregoing
formulae would result in the grant of an option with an exercise price below
the Fair Market Value (as defined in the Equity Plan) of the Common Stock on
the date of grant, such exercise price shall instead be the Fair Market Value
(as defined in the Equity Plan) of the Common Stock on such date of grant.


 


The number of shares of Common Stock subject to each option shall be
determined by dividing (a) $3.3 million, by (b) (i) (x) $3.4
billion, minus (y) the Initial Debt, divided by (ii) the Share Count,
minus (iii) the per share exercise price of such option (for the avoidance
of doubt, the amount represented by clause (iii) shall be subtracted from
the quotient of clause (i) divided by clause (ii)).  The “Initial Debt” shall be the total
borrowings of the Company outstanding at the time of the HSN Spin-Off under any
bank facility or other long-term indebtedness, and the “Share Count” shall be
the number of absolute shares of Common Stock outstanding immediately following
the HSN Spin-Off.


 


By way of example only, if the Initial Debt was $400
million and the Initial Share Count was 56.5 million, then the per share
exercise price of Option 1 would be $30.08 and the number of shares subject to
the option would be 143,370.


 


(e)                                  SUBSEQUENT
INCENTIVE AWARDS.  During the Term,
Executive shall be eligible to receive equity incentive awards pursuant to
annual or other grants under any equity-based compensation plan or plans that
may be established or maintained by the Company and cash incentive awards
pursuant to any incentive, bonus or similar plan that may be established or
maintained by the Company.  In
determining whether and to what extent Executive shall participate in any such
plans or programs, the Board (or the Compensation Committee thereof)


 


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shall
exercise its reasonable discretion, taking into account Executive’s position
and responsibilities; Executive’s and the Company’s performance; Executive’s
then-existing equity position with the Company; prior equity and/or cash
incentive awards granted to Executive; and equity and/or cash incentive awards
granted to other executives of the Company.


 


(f)                                    BENEFITS.  From the Effective Date through the date of
termination of Executive’s employment with the Company for any reason,
Executive shall be entitled to participate in any welfare, health and life
insurance and pension benefit programs as may be adopted from time to time by
the Company on at least as favorable a basis as that provided to similarly
situated employees of the Company. 
Without limiting the generality of the foregoing, Executive shall be
entitled to the following benefits:


 


(i)                                     Reimbursement
for Business Expenses.  During the
period that Executive is employed with the Company hereunder, the Company shall
reimburse Executive for all reasonable and necessary expenses (including
reasonable and documented costs of first/business class commercial air travel)
incurred by Executive in performing Executive’s duties for the Company, on the
same basis as similarly situated employees and in accordance with the Company’s
policies as in effect from time to time. 
Executive understands that her employment will require regular, weekly
travel outside of New York to the various businesses under her direction,
principally to St. Petersburg, Florida. 
Additionally, during the Term and prior to any “Relocation” (as defined
below), the Company will reimburse Executive for the cost of housing rental in
Florida in a location within reasonable commuting distance by car to the
Company’s offices in St. Petersburg, Florida, auto lease payments and auto
insurance (regardless of any Company policy to the contrary), and other
miscellaneous expenses associated with her regular stays in Florida (such
reimbursable expenses, the “Commuting Expenses”), such total amount not to
exceed $75,000 in any given fiscal year (provided, that such maximum
amount may be annually increased (but not decreased) at the Board’s discretion
to reflect annual increases in the Commuting Expenses).  In the event that Executive decides to
relocate to St. Petersburg, Florida on a full-time basis (the “Relocation”), (A) the
Company will reimburse Executive in accordance with the Company’s standard
relocation policy for all reasonable relocation expenses Executive incurs and (B) Executive
shall thereafter cease to be eligible for reimbursement for any of the
Commuting Expenses.  In the event that
any such payments or reimbursements in respect of the Commuting Expenses or the
Relocation are determined to be taxable compensation to Executive, the Company
shall make Executive whole for such tax obligations.  Any such make-whole tax payment made to
Executive pursuant to the immediately preceding sentence shall be paid by the
Company to Executive no later than the end of Executive’s taxable year next
following Executive’s taxable year in which the taxes on any
payments/reimbursements to Executive pursuant to this Section 3(A)(f)(i) are
remitted to the Internal Revenue Service or any other applicable taxing
authority.  The amount of any such fees
and expenses that the Company is obligated to pay pursuant to this Section 3A(f)(i)
in any given calendar year shall not affect the fees and expenses that the
Company is obligated to pay in any 


 


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other calendar year, and
Executive’s right to have the Company pay such fees and expenses may not be
liquidated or exchanged for any other benefit.


 


(ii)                                  Reimbursement
for Attorneys’ Fees.  The Company
shall reimburse Executive for up to $25,000 in reasonable attorneys’ fees and
disembursements incurred in connection with the negotiation of this
Agreement.  The amount of any such fees
and expenses that the Company is obligated to pay pursuant to this Section 3A(f)(ii) in
any given calendar year shall not affect the fees and expenses that the Company
is obligated to pay in any other calendar year, and Executive’s right to have
the Company pay such fees and expenses may not be liquidated or exchanged for
any other benefit.


 


(iii)                               Vacation.  During the period that Executive is employed
with the Company hereunder, Executive shall be entitled to not less than four (4) weeks
of paid vacation each year, in accordance with the plans, policies, programs
and practices of the Company applicable to similarly situated employees of the
Company generally.


 


4A.                             NOTICES.  All notices
and other communications under this Agreement shall be in writing and shall be
given by first-class mail, certified or registered with return receipt
requested or hand delivery acknowledged in writing by the recipient personally,
and shall be deemed to have been duly given three (3) days after mailing
or immediately upon duly acknowledged hand delivery to the respective persons
named below:


 


	
  If to the Company:

  	
   

  	
  to the General Counsel of the Company.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If to Executive:

  	
   

  	
  Mindy Grossman

  	
   

  	
   

  
	
   

  	
   

  	
  180 E. 79th Street

  	
   

  	
   

  
	
   

  	
   

  	
  Apt. 3C

  	
   

  	
   

  
	
   

  	
   

  	
  New York, New York   
  10021

  	
   

  	
   

  



 


Either party may change such party’s address for
notices by notice duly given pursuant hereto.


 


5A.                             GOVERNING
LAW; JURISDICTION.  This Agreement
(including its Exhibits) and the legal relations thus created between the
parties hereto shall be governed by and construed under and in accordance with
the internal laws of the State of Delaware without reference to the principles
of conflicts of laws which could cause the application of the law of any
jurisdiction other than the State of New York. 
Any and all disputes between the parties which may arise pursuant to
this Agreement will be heard and determined before an appropriate federal court  located in the County of New York, or, if not maintainable
therein, then in an appropriate New York state court located in the County of
New York.  The parties acknowledge that
such courts have jurisdiction to interpret and enforce the provisions of this
Agreement, and the parties consent to, and waive any and all objections that
they may have as to, personal jurisdiction and/or venue in such courts.  If Executive materially prevails in a dispute
with the Company, the Company shall promptly reimburse the reasonable attorneys’
fees and related expenses incurred by Executive in such dispute at any time
from the Effective Date of this Agreement through Executive’s remaining
lifetime (or, if longer, through the 20th anniversary of the
Effective Date).


 


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In order to comply
with Section 409A (as defined below), in no event shall the payments by
the Company under this Section 5A be made later than the end of the
calendar year next following the calendar year in which such fees and expenses
were incurred, provided, that Executive shall have submitted an invoice
for such fees and expenses at least ten (10) days before the end of the calendar
year next following the calendar year in which such fees and expenses were
incurred.  The amount of such legal fees
and expenses that the Company is obligated to pay in any given calendar year
shall not affect the legal fees and expenses that the Company is obligated to
pay in any other calendar year, and Executive’s right to have the Company pay
such legal fees and expenses may not be liquidated or exchanged for any other
benefit.  For these purposes, if there
are a series of disputes which are adjudicated in a single proceeding, whether
or not a party has materially prevailed shall be evaluated in terms of the
aggregate disputes.


 


6A.                             COUNTERPARTS.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.


 


7A.                             STANDARD TERMS AND CONDITIONS. 
Executive expressly understands and acknowledges that the Standard Terms
and Conditions attached hereto are incorporated herein by reference, deemed a
part of this Agreement and are binding and enforceable provisions of this
Agreement.  References to “this Agreement”
or the use of the term “hereof” shall refer to this Agreement and the Standard
Terms and Conditions attached hereto, taken as a whole.  Capitalized terms used but not defined in the
Standard Terms and Conditions shall have the meanings assigned to such terms in
this Agreement.


 


8A.                             SECTION 409A
OF THE INTERNAL REVENUE CODE.  This
Agreement is intended to comply with the requirements of Section 409A of
the of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and
regulations issued thereunder (“Section 409A”)  or an exemption and shall in all respects be
administered in accordance with Section 409A.    Notwithstanding anything in the Agreement
to the contrary, distributions upon termination of employment may only be made
upon a “separation from service” as determined under Section 409A.  Each payment under this Agreement shall be
treated as a separate payment for purposes of Section 409A.  In no event may Executive, directly or
indirectly, designate the calendar year of any payment to be made under this
Agreement that is “nonqualified deferred compensation” within the meaning of Section 409A.  All reimbursements and in-kind benefits
provided under this Agreement shall be made or provided in accordance with the
requirements of Section 409A.   In
the event the parties determine that the terms of this Agreement do not comply
with Section 409A, they will negotiate reasonably and in good faith to
amend the terms of this Agreement such that it complies (in a manner that
attempts to minimize the economic impact of such amendment on Executive and the
Company) within the time period permitted by the applicable Treasury
Regulations.  In no event shall the
Company be required to pay Executive any “gross-up” or other payment with
respect to any taxes or penalties imposed under Section 409A with respect
to any benefit paid or promised to Executive hereunder based on the Company’s
reasonable good-faith interpretation of Section 409A.


 


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9A.                             CERTAIN ADDITIONAL PAYMENTS BY THE
COMPANY.


 


(a)                                  If
it is determined (as hereafter provided) that any payment or distribution by
the Company  to or for the benefit of
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement of the Company, including
without limitation any restricted stock unit, stock option, stock appreciation right
or similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (a “Payment”), would be
subject to the excise tax imposed by Section 4999 of the Code (or any
successor provision thereto), or any interest or penalties with respect to such
excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the “Excise Tax”), then Executive
will be entitled to receive an additional payment or payments (a “Gross-Up
Payment”) in an amount such that, after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment, but excluding in
all cases any income taxes and penalties imposed pursuant to Section 409A
on amounts paid or promised to Executive based on the Company’s reasonable
good-faith interpretation of Section 409A, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  Notwithstanding the foregoing provisions of
this Section 9A(a), if it shall be determined in accordance with this Section 9A
that Executive is entitled to the Gross-Up Payment, but that the “Parachute
Value” (as defined below) of all Payments does not exceed 110% of the “Safe
Harbor Amount” (as defined below), then no Gross-Up Payment shall be made to
Executive and the amounts payable under this Agreement shall be reduced so that
the Parachute Value of all payments, in the aggregate, equals the Safe Harbor
Amount. The reduction of the amounts payable under this Agreement, if
applicable, shall be made by reducing the payments and benefits under the
following sections of the Standard Terms and Conditions in the following order:
(i) Section 1(d)(i), (ii) Section 1(d)(iii), (iii) Section 1(d)(v) and
(iv) Section 1(d)(iv).  For
purposes of reducing the Payments to the Safe Harbor Amount, only amounts
payable under this Agreement (and no other payments) shall be reduced. If the
reduction of the amount payable under this Agreement would not result in a  reduction of the Parachute Value of all
Payments to the Safe Harbor Amount, no amounts payable under this Agreement
shall be reduced pursuant to this Section 9A(a).  The Company’s obligation to make Gross-Up
Payments under this Section 9 shall not be conditioned upon Executive’s
termination of employment.


 


(b)                                 Subject
to the provisions of Section 9A(f) of this Agreement, all
determinations required to be made under this Section 9A, including
whether an Excise Tax is payable by Executive and the amount of such Excise Tax
and whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, will be made by a nationally recognized firm of certified public
accountants (the “Accounting Firm”) chosen by the Company.  The Company will direct the Accounting Firm
to submit its determination and detailed supporting calculations to both the
Company and Executive within fifteen (15) calendar days after the date of the
event giving rise to the Payment or the date of Executive’s termination of
employment, if applicable, and any other such time or times as may be
reasonably requested by the Company or Executive.  If the Accounting Firm determines that any
Excise Tax is 


 


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payable
by Executive, the Company will pay the required Gross-Up Payment to Executive
within fifteen (15) business days after receipt of such determination and
calculations.  If the Accounting Firm
determines that no Excise Tax is payable by Executive, it will, at the same
time as it makes such determination, furnish Executive with an opinion that she
has substantial authority not to report any Excise Tax on her federal, state,
local income or other tax return.  Any
determination by the Accounting Firm as to the amount of the Gross-Up Payment
will be binding upon the Company and Executive. 
As a result of the uncertainty in the application of Section 4999
of the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
“Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Company
exhausts or fails to pursue its remedies pursuant to Section 9A(f) hereof
and Executive thereafter is required to make a payment of any Excise Tax,
Executive will direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and Executive as promptly as
possible.  Any such Underpayment will be
promptly paid by the Company to, or for the benefit of, Executive within
fifteen (15) business days after receipt of such determination and
calculations.


 


(c)                                  The
Company and Executive will each cooperate with the Accounting Firm in
connection with the preparation and issuance of the determination contemplated
by Section 9A(b) of this Agreement.


 


(d)                                 The
federal, state and local income or other tax returns filed by Executive will be
prepared and filed on a consistent basis with the determination of the
Accounting Firm with respect to the Excise Tax payable by Executive.  Executive will make proper payment of the
amount of any Excise Tax, and, at the request of the Company, provide to the
Company true and correct copies (with any amendments) of her federal income tax
return as filed with the Internal Revenue Service (the “IRS”) and corresponding
state and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Company,
evidencing such payment.  If prior to the
filing of Executive’s federal income tax return, or corresponding state or
local tax return, if relevant, the Accounting Firm determines that the amount
of the Gross-Up Payment should be reduced, Executive will, within fifteen (15)
business days pay to the Company the amount of such reduction.


 


(e)                                  The
fees and expenses of the Accounting Firm for its services in connection with
the determinations and calculations contemplated by Section 9A(b) and
Section 9A(d) of this Agreement will be borne by the Company and paid
as incurred; provided, however, (i) the Company shall pay the fees and
expenses of the Accounting Firm not later than the end of the calendar year
following the calendar year in which the related work is performed or the
expenses are incurred by the Accounting Firm, (ii) the amount of the
Accounting Fees that the Company is obligated to pay in any given calendar year
shall not affect the Accounting Fees that the Company is obligated to pay in
any other calendar year, and (iii) Executive’s right to have the Company
pay such fees and expenses may not be liquidated or exchanged for any other
benefit.  If such fees and expenses are
initially advanced by Executive, the Company will reimburse Executive the full
amount of such fees and expenses within fifteen (15) business days after
receipt from Executive of a statement therefor and reasonable evidence of her
payment thereof.


 


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(f)                                    Executive
will notify the Company in writing of any claim by the IRS that, if successful,
would require the payment by the Company of a Gross-Up Payment.  Such notification will be given as promptly
as practicable but no later than ten (10) business days after Executive
actually receives notice of such claim and Executive will further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by Executive).  Executive will not pay such claim prior to
the earlier of (x) the expiration of the thirty (30) calendar-day period
following the date on which she gives such notice to the Company and (y) the
date that any payment of amount with respect to such claim is due.  If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive will:


 


(i)                                     provide
the Company with any written records or documents in her possession relating to
such claim reasonably requested by the Company;


 


(ii)                                  take
such action in connection with contesting such claim as the Company will
reasonably request in writing from time to time, including without limitation
accepting legal representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably selected by the
Company;


 


(iii)                               cooperate
with the Company in good faith in order effectively to contest such claim; and


 


(iv)                              permit
the Company to participate in any proceedings relating to such claim;


 


provided, however, that the Company will
bear and pay directly all costs and expenses (including interest and penalties)
incurred in connection with such contest and will indemnify and hold harmless
Executive, on an after-tax basis, for and against any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses; provided, further,
however, (i) the Company shall pay the costs and expenses not later than
the end of the calendar year following the calendar year in which the costs and
expenses are incurred, (ii) the amount of such costs and expenses that the
Company is obligated to pay in any given calendar year shall not affect the
costs and expenses that the Company is obligated to pay in any other calendar
year, and (iii) the Executive’s right to have the Company pay such costs
and expenses may not be liquidated or exchanged for any other benefit.  Without limiting the foregoing provisions of
this Section 9A(f), the Company will control all proceedings taken in
connection with the contest of any claim contemplated by this Section 9A(f) and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided that Executive may participate therein at her own cost and
expense) and may, at its sole option, either pay the tax claimed to the
appropriate taxing authority on behalf of Executive and direct Executive to sue
for a


 


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refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company will determine; provided, that if the Company pays such claim and
directs Executive to sue for a refund, the Company will indemnify and hold
Executive harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest or penalties with respect thereto, imposed with respect to
such payment or with respect to any imputed income in connection with such
payment; and provided further, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Executive with respect to
which the contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the
Company’s control of any such contested claim will be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder, and Executive
will be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or any other taxing authority.


 


(g)                                 If,
after the receipt by Executive of a Gross-Up Payment or a payment by the
Company of an amount on Executive’s behalf pursuant to Section 9A(f) hereof,
Executive receives any refund with respect to such claim, Executive will
(subject to the Company’s complying with the requirements of Section 9A(f) hereof)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto).  If, after payment by the Company of an amount
on Executive’s behalf pursuant to Section 9A(f) hereof, a
determination is made that Executive will not be entitled to any refund with
respect to such claim and the Company does not notify Executive in writing of
its intent to contest such denial or refund prior to the expiration of thirty
(30) calendar days after such determination, then the amount of such payment
will offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid pursuant to this Section 9A.


 


(h)                                 If
it is ultimately determined (by IRS private letter ruling or closing agreement,
court decision or otherwise) that any Gross-Up Payments and/or Underpayments
and/or any other amounts paid or made by the Company pursuant to this Section 9A
were not necessary to accomplish the purpose of this Section 9A, Executive
shall promptly cooperate with the Company to correct such overpayments (by way
of assigning any refund to the Company as provided herein, by direct repayment
or otherwise) in a manner consistent with the purpose of this Section 9A,
which is to protect Executive by making her whole, but not more than whole, on
an after-tax basis, from the application of the Excise Tax.


 


(i)                                     Any
Gross-Up Payment, as determined pursuant to this Section 9, shall be paid
by the Company to Executive within five (5) days of the receipt of the
Accounting Firm’s determination; provided that, the Gross-Up Payment shall in
all events be paid no later than the end of Executive’s taxable year next
following Executive’s taxable year in which the Excise Tax (and any income or
other related taxes or interest or penalties thereon) on a Payment are remitted
to the Internal Revenue Service or any other applicable taxing authority or, in
the case of amounts relating to a claim described in Section 9A(f) that
does not result in the remittance of any federal, state, local and foreign
income, excise, social security and other taxes, the calendar year in which the
claim is finally settled or otherwise resolved. Notwithstanding any other
provision of this Section 9A to the contrary, the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of Executive, all or any portion
of any Gross-Up Payment, and Executive hereby consents to such withholding.


 


10

















 


“Parachute
Value” of a Payment shall mean the present value as of the date of the change
of control for purposes of Section 280G of the Code of the portion of such
Payment that constitutes a “parachute payment” under Section 280G(b)(2) as
determined by the Accounting firm for purposes of determining whether and to
what extent the Excise Tax will apply to such Payment.


 


“Safe
Harbor Amount” means 2.99 times Executive’s “base amount,” within the meaning
of Section 280G(b)(3) of the Code.


 


10A.                       Notwithstanding anything to the contrary
herein, this Agreement shall become effective if and only if the Effective Date
occurs on or before January 31, 2009, and if the Effective Date does not
occur on or before January 31, 2009 this Agreement shall be null and void
and of no force and effect.


 


[The Signature Page Follows]


 


11

















 


IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed and delivered by its duly authorized officer and
Executive has executed and delivered this Agreement as of the date set forth
above.


 


	
   

  	
  HSN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Gregory Blatt

  
	
   

  	
  By: Gregory Blatt

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mindy Grossman

  
	
   

  	
  Mindy Grossman

  



 


12














 


STANDARD TERMS AND CONDITIONS


 


References herein to the “Agreement”
shall be deemed to refer to the Employment Agreement between the executive and
the Company dated as of July 29, 2008 as the same may be amended and in
effect from time to time (the “Employment Agreement”), incorporating these terms
and conditions therein as if part of the same.


 


1.           TERMINATION OF
EXECUTIVE’S EMPLOYMENT.


 


(a)           DEATH.  In the event Executive’s employment hereunder
is terminated by reason of Executive’s death, (i) the Company shall pay
Executive’s designated beneficiary or beneficiaries within thirty (30) days
following Executive’s death in a lump sum in cash (A) Executive’s Base
Salary through the end of the month in which death occurs and (B) any “Accrued
Obligations” (as defined in paragraph 1(f) below), (ii) a number of
the restricted stock units with respect to shares of IAC common stock granted
to Executive on April 9, 2008
(the “2008 Cliff Vesting Restricted Stock Units”) (as converted in connection
with the HSN Spin-Off) shall automatically vest such that the total number of
such 2008 Cliff Vesting Restricted Stock Units vested shall equal one-fourth of
the original 2008 Cliff Vesting Restricted Stock Units (on an as converted
basis) granted for each year of completed service by Executive following January 31,
2008 (the “Base Vesting Date”) (e.g., if Executive’s employment is terminated
by virtue of death two years and three months following the Base Vesting Date,
she will vest in a total of 50% of the original 2008 Cliff Vesting Restricted
Stock Units) and (iii) a number of the restricted stock units with respect
to shares of IAC common stock granted to Executive on May 17, 2006 (the “2006 Cliff Vesting Restricted Stock Units”)
(as converted in connection with the HSN Spin-Off) shall automatically vest
such that the total number of such 2006 Cliff Vesting Restricted Stock Units
vested shall equal one-fifth of the original 2006 Cliff Vesting Restricted
Stock Units (on an as converted basis) granted for each year of completed
service by Executive following May 1, 2006 (e.g., if Executive’s
employment is terminated by virtue of death two years and three months
following May 1, 2006, she will vest in a total of 40% of the original
2006 Cliff Vesting Restricted Stock Units).


 


(b)           DISABILITY.  If, as a result of Executive’s incapacity due
to physical or mental illness (“Disability”), Executive shall have been absent
from the full-time performance of Executive’s duties with the Company for a
period of four (4) consecutive months and, within thirty (30) days after
written notice is provided to Executive by the Company (in accordance with Section 4A
of the Employment Agreement), Executive shall not have returned to the
full-time performance of Executive’s duties, Executive’s employment under this
Agreement may be terminated by the Company for Disability.  During any period prior to such termination
during which Executive is absent from the full-time performance of Executive’s
duties with the Company due to Disability, the Company shall continue to pay
Executive’s Base Salary at the rate in effect at the commencement of such
period of Disability and provide all other payments and benefits required under
this Agreement, offset (in the case of cash payments) by any amounts paid to
Executive for such period under any disability insurance plan or policy
provided by the Company.  Upon
termination of Executive’s employment due to Disability, (i) the Company


 

















 


shall
pay Executive within thirty (30) days following such termination in a lump sum in
cash (A) Executive’s Base Salary through the end of the month in which
termination occurs, offset by any amounts paid to Executive for such period
under any disability insurance plan or policy provided by the Company, and (B) any
Accrued Obligations (as defined in paragraph 1(f) below) (provided that
any payments in respect of previously earned but unpaid Bonuses, shall be made
no later than the 15th day of the third month following the close of such
Fiscal Year unless Executive has previously elected to defer the receipt of
such bonus pursuant to an arrangement that meets the requirements of Section 409A),
(ii) a number of 2008 Cliff Vesting Restricted Stock Units (as converted
in connection with the HSN Spin-Off) shall automatically vest such that the total
number of such 2008 Cliff Vesting Restricted Stock Units vested shall equal
one-fourth of the original 2008 Cliff Vesting Restricted Stock Units (on an as
converted basis) granted for each year of completed service by Executive
following the Base Vesting Date (e.g., if Executive’s employment is terminated
by virtue of Disability two years and three months following the Base Vesting
Date, she will vest in a total of 50% of the original 2008 Cliff Vesting
Restricted Stock Units) and (iii) a number of the 2006 Cliff Vesting
Restricted Stock Units (as converted in connection with the HSN Spin-Off) shall
automatically vest such that the total number of such 2006 Cliff Vesting
Restricted Stock Units vested shall equal one-fifth of the original Cliff
Vesting Restricted Stock Units (on an as converted basis) granted for each year
of completed service by Executive following May 1, 2006 (e.g., if
Executive’s employment is terminated by virtue of Disability two years and
three months following May 1, 2006, she will vest in a total of 40% of the
original 2006 Cliff Vesting Restricted Stock Units), provided that if
such 2008 Cliff Vesting Restricted Stock Units or 2006 Cliff Vesting Restricted
Stock Units constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code, the delivery of shares of common stock or
cash (as applicable) in settlement of such awards shall be made on the date
that is six months after Executive’s “separation from service,” if required by Section 409A,
or if earlier,
immediately following any permissible payment event under Section 409A.


 


(c)           TERMINATION
BY THE COMPANY FOR CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON.  The Company may terminate Executive’s employment
under this Agreement with or without Cause at any time prior to the expiration
of the Term.  Executive may voluntarily
terminate her employment hereunder other than for Good Reason at any time prior
to the expiration of the Term by providing written notice to the Company at
least thirty (30) days prior to termination. 
As used herein, “Cause” shall mean: (i) the plea of guilty or nolo
contendere to, or conviction for, the commission of a felony offense by
Executive; provided, however, that after indictment, the Company
may suspend Executive from the rendition of services, but without limiting or
modifying in any other way the Company’s obligations under the Agreement
(including the Exhibits hereto); provided, further, that
Executive’s employment shall be immediately reinstated if the indictment is
dismissed or otherwise dropped and there is not otherwise grounds to terminate
Executive’s employment for Cause; (ii) a material breach by Executive of a
fiduciary duty owed to the Company which, in the good faith reasonable
determination of the Board, undermines the confidence of the Board in Executive’s
fitness to continue in her position; provided, however, that, to
the extent such material breach can be remedied, the Board’s determination as
to whether “Cause” exists under this Section 1(c)(ii) shall


 


2

















 


take into account any remedial action taken by
Executive, including any such action taken during the five (5)-day period
following the Board’s provision to Executive of a written demand for remedial
action, which demand specifically identifies the manner in which the Company
believes that Executive has materially breached such fiduciary duty; (iii) a
material breach by Executive of any of the covenants made by Executive in Section 3
hereof; provided, however, that in the event such material breach
is curable, Executive shall have failed to remedy such material breach within
ten (10) days of Executive having received a written demand for cure by
the Board, which
demand specifically identifies the manner in which the Company believes that
Executive has materially breached any of the covenants made by Executive in Section 3
hereof; (iv) Executive’s continued failure to perform her material duties
with the Company or otherwise follow the reasonable direction of the Board
(other than any such failure resulting from Executive’s incapacity due to
physical or mental illness) for a period of five (5) days following
Executive’s receipt of written notice signed by the Board which specifically
identifies the manner in which the Company believes that Executive has not
substantially performed Executive’s duties, provided if Executive’s
whereabouts are unknown to the Company, then such termination shall be
effective within eight (8) days of the sending of such notice, or (v) a
knowing and material violation by Executive of any material Company policy
pertaining to ethics, wrongdoing or conflicts of interest, provided such policy
has been communicated to Executive in writing (which may have been through
electronic means) prior to such violation; provided, that with respect
to each of clauses (i) through (v) of this Section 1(c), “Cause”
shall be deemed to exist solely if it is so determined in good faith by the
vote of not less 2/3 of the Board (excluding Executive).  Upon (A) the termination of Executive’s
employment by the Company for Cause or (B) Executive’s resignation without
“Good Reason” (as defined in Section 1(d)) prior to the expiration of the
Term, the Company shall have no further obligation hereunder, except for the payment
of any Accrued Obligations.


 


(d)           TERMINATION
BY THE COMPANY OTHER THAN FOR DEATH, DISABILITY OR CAUSE; TERMINATION BY
EXECUTIVE FOR GOOD REASON.  If
Executive’s employment is terminated prior to the expiration of the Term by the
Company (including pursuant to the Company’s written notification of
non-renewal of this Agreement in accordance with Section 2A of the
Employment Agreement) for any reason other than Cause or Executive’s death or
Disability, or by Executive for Good Reason, then:


 


(i) the Company
shall continue to pay to Executive the Base Salary (at the rate then in effect)
for twenty-four months (the “Severance Period”) in equal bi-weekly installments
consistent with the Company’s regular payroll practices for the payment of base
salary for its employees as in effect from time to time, (the “Cash Severance
Payments”),


 


(ii) the Company
shall pay to Executive within thirty (30) days of the date of such termination
any Accrued Obligations (as defined in paragraph 1(f) below) (provided
that any payments in respect of previously earned but unpaid Bonuses, shall be
made no later than the 15th day of the third month following the close of such
Fiscal Year unless Executive has previously elected to defer the receipt of
such bonus pursuant to an arrangement that meets the requirements of Section 409A),


 


3

















 


(iii) the Company
shall pay to Executive at the time when bonuses for the Fiscal Year in which
the date of termination occurs would otherwise be paid (but in no event later
than the 15th day of the third month following the close of such Fiscal Year
unless Executive has previously elected to defer the receipt of such Bonus
pursuant to an arrangement that meets the requirements of Section 409A),
any Bonus that would have been earned by Executive during such Fiscal Year if
such termination had not occurred, which Bonus shall be based on the Company’s
actual achievement of pre-established performance criteria established by the
Compensation Committee in accordance with Section 3A(b) of the
Employment Agreement, provided, that (A) in the event that as of
the date on which Executive’s employment terminates such criteria have not been
established, the Bonus shall not be less than the Adjusted Bonus, and (B) if
the determination of the Bonus that would have been earned by Executive during
such Fiscal Year is based, in whole or part, on the exercise of discretion by
the Compensation Committee, the Bonus shall not be reduced by such discretion
below, the Adjusted Bonus.  Any Bonus
payable pursuant to this clause (iii) shall be reduced by a percentage
equal to the percentage of the year remaining following the date of Executive’s
termination of employment.  For these
purposes, the Adjusted Bonus shall be the product of (x) Executive’s
Target Bonus for such Fiscal Year, and (y) a percentage equal to the
average of the percentages of the respective target annual bonuses of the
officers of the Company (other than Executive) who were “named executive
officers” whose compensation was disclosed in the Summary Compensation Table
included in the Company’s disclosure under Item 402 of Regulation S-K
promulgated by the Securities and Exchange Commission in respect of the Fiscal
Year during which the date of termination occurs that were awarded to such
officers in respect of such Fiscal Year (disregarding for this purpose any pro
ration of such annual bonus for any such officer whose service with the Company
terminated during the Fiscal Year, if applicable),


 


(iv) any
compensation awards of Executive based on, or in the form of, Company equity
(e.g., restricted stock, restricted stock units, stock options or similar
instruments), and any equity awards in other companies that were originally
denominated in shares of IAC stock and were converted in the Spin-Off, that are
(A) outstanding and unvested at the time of such termination and (B) were
outstanding immediately after the Effective Date (collectively, the “Equity
Awards”) shall automatically vest upon the date of such termination, and all
stock options shall remain exercisable for the shorter of (1) 12 months
following the date of termination and (2) the remainder of their full
term, provided that, in the event any such awards constitute “nonqualified
deferred compensation” within the meaning of Section 409A, the delivery of
shares of common stock or cash (as applicable) in settlement of such awards
shall be made on the date that is six months after the Executive’s “separation
from service,” if required by Section 409A, or if earlier, immediately following any permissible
payment event under Section 409A; provided, further, however, that
any Equity Awards that would vest under this provision but for the fact that
outstanding performance conditions have not been satisfied shall vest only if,
and at such point as, such performance conditions are satisfied.


 


4

















 


(v) for a period
ending on the earlier of (A) eighteen (18) months following the date of
the termination of Executive’s employment with the Company, (B) the
expiration of the Term and (C) the time Executive becomes eligible for
such benefits from another employer, the Company shall continue to provide
health benefits and term life insurance to Executive and her covered
dependents, if any, as are provided from time to time to actively employed
senior executives of the Company.  To the
extent that the Company determines that the health benefits and term life
insurance provided for in this Section 1(d) are not permissible after
termination of employment under the terms of the benefit plans of the Company
then in effect (and cannot be provided through the Company’s paying the
applicable premium for Executive under COBRA), the Company shall pay to
Executive (within thirty (30) days after the date of termination of employment)
such amount as is necessary to provide Executive, after tax, with an amount
equal to the cost of acquiring, for Executive and her spouse and dependents, if
any, on a non-group basis, for the period specified above, those benefits that
would have been provided to Executive and her spouse and dependents under this Section 1(d)


 


With respect to the
payments described in paragraphs (i) and (iii) above, any reduction
in Executive’s Base Salary or Target Bonus that would constitute Good Reason as
defined herein shall be disregarded.  The
payment to Executive of the severance benefits described in this Section 1(d) shall
be subject to Executive’s execution and non-revocation of a general release of
the Company and its affiliates, within thirty (30) days of the date of
termination of Executive’s employment, for claims related to Executive’s
termination of employment (the “Release”). 
Executive acknowledges and agrees that the severance benefits described
in this Section 1(d) constitute good and valuable consideration for
the Release.


 


Notwithstanding the preceding provisions of this Section 1(d), in
the event that Executive is a “specified employee” (within the meaning of Section 409A)
on the date of termination of Executive’s employment with the Company and the
Cash Severance Payments to be paid within the first six months following such
date (the “Initial Payment Period”) exceed the amount referenced in Treas.
Regs. Section 1.409A-1(b)(9)(iii)(A) (the “Limit”), then (i) any
portion of the Cash Severance Payments that is payable during the Initial
Payment Period that does not exceed the Limit shall be paid at the times set
forth in Section 1(d)(i) as applicable, (ii) any portion of the
Cash Severance Payments that is a “short-term deferral” within the meaning of
Treas. Regs. Section 1.409A-1(b)(4)(i) shall be paid at the times set
forth in Section 1(d)(i), (iii) any portion of the Cash Severance
Payments that exceeds the Limit and is not a “short-term deferral” (and would
have been payable during the Initial Payment Period but for the Limit) shall be
paid, with Interest, on the first business day of the first calendar month that
begins after the six-month anniversary of Executive’s “separation from service”
(within the meaning of Section 409A) and (iv) any portion of the Cash
Severance Payments that is payable after the Initial Payment Period shall be
paid at the times set forth in Section 1(d)(i).  For purposes of this paragraph, “Interest”
shall mean interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code, from the date on which payment would otherwise have been made but for
any required delay through the date of payment.


 


For purposes of
the Agreement:


 


5

















 


“Good Reason” shall mean the occurrence of any of the
following without Executive’s prior written consent:  (A) the Company’s material breach of
this Agreement, (B) the material reduction in Executive’s title, duties,
reporting responsibilities or level of responsibilities, excluding for this
purpose any such reduction resulting from any disposition of assets so long as
the Company retains the businesses relating to the HSN television network and
web-site and acknowledging that the involvement of the Chairman of the Board in
certain matters primarily relating to public company reporting, significant
corporate transactions, or other significant financial, legal and accounting
matters, shall not constitute any such reduction provided that Executive continues
to have primary responsibility for the management of all operations and
activities of the businesses of the Company, (C) a material reduction in
the Base Salary or Target Bonus or (D) a
relocation by the Company of Executive’s principal place of business to any
area more than fifty (50) miles from New York, New York; provided, that
in no event shall Executive’s resignation be for “Good Reason” unless (x) an
event or circumstance set forth in clauses (A), (B), (C) or (D) shall
have occurred and Executive provides the Company with written notice thereof
within ninety (90) days after Executive has actual knowledge of the occurrence
or existence of such event or circumstance, which notice specifically
identifies the event or circumstance that Executive believes constitutes Good
Reason, (y) the Company fails to correct the circumstance or event so
identified within thirty (30) days after the receipt of such notice, and (z) Executive
resigns within one hundred and twenty (120) days after the date of delivery of
the notice referred to in clause (x) above;


 


(e)           OFFSET.  In the event Executive’s employment is
terminated in a manner that entitles Executive to payments under Section 1(d),
and Executive subsequently obtains other employment during the Severance
Period, then Executive shall have an obligation to promptly repay the Company
out of her current cash earnings (i.e., base salary and, if applicable, any
sign-on or annual bonus, but not cash- or equity-based long-term incentive
awards, retirement or welfare benefits, or any other payments or benefits) from
such subsequent employment during the Severance Period an amount equal to all
cash payments made to Executive under Section 1(d)(i) and 1(d)(iii) (such
amounts, the “Cash Severance Payments”) in excess of One Million Dollars
($1,000,000).  This repayment obligation
shall be satisfied to the extent that, after taking into account all taxes
withheld or paid on account of the Cash Severance Payments, all actual
repayments by Executive to the Company and all deductions Executive receives as
a result of such repayment, Executive is in the same economic position as if
she had only been paid, on a pre-tax basis, One Million Dollars ($1,000,000) of
Cash Severance Payments, provided Executive shall be required to take
all reasonably available steps that have no significant adverse economic impact
on Executive to limit the amount of taxes owed on the Cash Severance Payments
and to maximize the tax benefit to Executive resulting from Executive’s
repayment obligation to the Company (and thereby maximize the amount of the
repayment obligation to the Company). 
Such repayment obligation of Executive shall also take the form of an
offset for any ongoing Cash Severance Payments. 
In the event of any termination of Executive’s employment hereunder,
Executive shall be under no obligation to seek other employment but, for
purposes of this Section 1(e), Executive shall have an obligation to
inform the Company promptly regarding


 


6

















 


Executive’s
employment status following termination and during the period encompassing the
Term.


 


(f)            ACCRUED OBLIGATIONS.  As used herein, “Accrued Obligations” shall
mean the sum of (i) any portion of Executive’s accrued but unpaid Base
Salary through the date of death or termination of employment for any reason,
as the case may be; (ii) any accrued but unpaid vacation or expense
reimbursements; (iii) any earned but unpaid Bonus with respect to the
fiscal year preceding the fiscal year in which the termination occurs; and (iv) any
compensation previously earned but deferred by Executive (together with any
interest or earnings thereon) that has not yet been paid and that is not
otherwise paid at a later date pursuant to any deferred compensation
arrangement of the Company to which Executive is a party, if any (provided,
that any election made by Executive pursuant to any deferred compensation
arrangement that is subject to Section 409A of the Code regarding the
schedule for payment of such deferred compensation shall prevail over this Section 1(d) to
the extent inconsistent herewith) .


 


2.             TREATMENT
OF CERTAIN OF EXECUTIVE’S EQUITY-BASED AWARDS IN THE EVENT OF A CHANGE OF
CONTROL OF THE COMPANY.  In the event
that, during the Term, there is consummated a “Change of Control” (as such term
shall be defined in the omnibus equity compensation plan to be adopted by the
Company), any Equity Awards that are (i) outstanding and unvested at the
time of such Change of Control and (ii) were outstanding immediately after
the Effective Date shall vest in full; provided, however, that if any portion
of such Equity Awards constitutes “nonqualified deferred compensation” within
the meaning of Section 409A, the delivery of shares of Common Stock or
cash (as applicable) in settlement of such Existing Awards shall occur on the
date of the Change of Control only if the Change of Control constitutes a “change
in control event” within the meaning of Section 409A, and otherwise shall
occur on the applicable Equity Award’s regular settlement date .


 


3.             CONFIDENTIAL
INFORMATION; NON-SOLICITATION; AND PROPRIETARY RIGHTS.


 


(a)           CONFIDENTIALITY.  Executive acknowledges that, while employed
by the Company, Executive will occupy a position of trust and confidence.  The Company shall provide Executive with “Confidential
Information” as referred to below. 
Executive shall not, except as may be required to perform Executive’s
duties hereunder or as required by applicable law, without limitation in time,
communicate, divulge, disseminate, disclose to others or otherwise use, whether
directly or indirectly, any Confidential Information regarding the Company or
any of its subsidiaries or affiliates.  “Confidential
Information” shall mean information about the Company or any of its
subsidiaries or affiliates, and their respective businesses, employees,
consultants, contractors, clients and customers that is not disclosed by the
Company or any of its subsidiaries or affiliates for financial reporting
purposes or otherwise made available to the public (other than by Executive’s
breach of the terms hereof) and that was learned by Executive in the course of
employment by the Company or any of its subsidiaries or affiliates, including
(without limitation) any proprietary knowledge, trade secrets, data,


 


7

















 


formulae,
information and client and customer lists and all papers, resumes, and records
(including computer records) of the documents containing such Confidential
Information.  Executive acknowledges that
such Confidential Information is specialized, unique in nature and of great
value to the Company and its subsidiaries or affiliates, and that such
information gives the Company and its subsidiaries or affiliates a competitive
advantage.  Executive agrees to deliver or
return to the Company, at the Company’s request at any time or upon termination
or expiration of Executive’s employment or as soon thereafter as possible, all
documents, computer tapes and disks, records, lists, data, drawings, prints,
notes and written information (and all copies thereof) furnished by the Company
and its subsidiaries or affiliates or prepared by Executive in the course of
Executive’s employment by the Company and its subsidiaries or affiliates.  As used in this Agreement, “subsidiaries” and  “affiliates” shall mean any company
controlled by, controlling or under common control with the Company.  For purposes of this Section 3(a), “Company”
shall mean IAC and the Company (and their respective predecessors and
successors).


 


(b)             NON-COMPETITION.  In consideration of the Company’s promise to
disclose, and disclosure of, its Confidential Information and other good and
valuable consideration provided hereunder, the receipt and sufficiency of which
are hereby acknowledged by Executive, Executive hereby agrees and covenants
that during the Term and for a period of twelve (12) months following
termination of Executive’s employment for any reason or no reason, Executive
shall not (other than on behalf of the Company or any of its subsidiaries or
affiliates), without the prior written consent of the Company, directly or
indirectly engage in or assist any retailing business (whether traditional “bricks-and-mortar”,
online, catalog, television or other) or any other business of a type
substantially similar to any business for which Executive becomes responsible
while employed by the Company at any time during the Term, whether such
engagement or assistance is as an officer, director, proprietor, employee,
partner, investor (other than as a holder of less than 5% of the outstanding
capital stock of a publicly traded entity), guarantor, consultant, advisor,
agent, sales representative or other similar relationship, in any country in
the world where the Company or any of its subsidiaries or affiliates has conducted
business during the Term (provided, that inadvertent receipt of
television signals or access to the Company’s web sites in a particular country
shall not, without more, constitute the conduct of business by the Company in
such country).  Notwithstanding the
foregoing, the obligations under this Section 3(b) shall extend an
additional six (6) months with respect to Executive becoming associated
with QVC or any other business a principal aspect of which is selling goods via
television.


 


(c)             NON-SOLICITATION
OF EMPLOYEES.  Executive recognizes
that she will possess Confidential Information about other employees,
consultants and contractors of the Company and its subsidiaries or affiliates
relating to their education, experience, skills, abilities, compensation and
benefits, and inter-personal relationships with suppliers to and customers of
the Company and its subsidiaries or affiliates. 
Executive recognizes that the information she will possess about these
other employees, consultants and contractors is not generally known, is of
substantial value to the Company and its subsidiaries or affiliates in
developing their respective businesses and in securing and retaining customers,
and will be acquired by Executive because of


 


8

















 


Executive’s
business position with the Company. 
Executive agrees that, during the Term (and for a period of eighteen
(18) months following termination of Executive’s employment for any reason or
no reason), Executive will not, directly or indirectly, hire or solicit or
recruit any employee of the Company or any of its subsidiaries or affiliates
(other than her personal secretary at the time of the termination of her
employment) for the purpose of being employed by Executive or by any business,
individual, partnership, firm, corporation or other entity on whose behalf
Executive is acting as an agent, representative or employee.


 


(d)             PROPRIETARY
RIGHTS; ASSIGNMENT.  All Executive
Developments shall be made for hire by Executive for the Company or any of its
subsidiaries or affiliates.  “Executive
Developments” means any idea, discovery, invention, design, method, technique,
improvement, enhancement, development, computer program, machine, algorithm or
other work or authorship that (i) relates to the business or operations of
the Company or any of its subsidiaries or affiliates, or (ii) results from
or is suggested by any undertaking assigned to Executive or work performed by
Executive for or on behalf of the Company or any of its subsidiaries or
affiliates, whether created alone or with others, during or after working
hours.  All Confidential Information and
all Executive Developments shall remain the sole property of the Company or any
of its subsidiaries or affiliates. 
Executive shall acquire no proprietary interest in any Confidential
Information or Executive Developments developed or acquired during the
Term.  To the extent Executive may, by
operation of law or otherwise, acquire any right, title or interest in or to any
Confidential Information or Executive Development, Executive hereby assigns to
the Company all such proprietary rights. 
Executive shall, both during and after the Term, upon the Company’s
request, promptly execute and deliver to the Company all such assignments,
certificates and instruments, and shall promptly perform such other acts, as
the Company may from time to time in its discretion deem necessary or desirable
to evidence, establish, maintain, perfect, enforce or defend the Company’s
rights in Confidential Information and Executive Developments.


 


(e)             COMPLIANCE
WITH POLICIES AND PROCEDURES.  During
the period that Executive is employed with the Company hereunder, Executive
shall adhere to the policies and standards of professionalism set forth in the
Company’s Policies and Procedures as they may be communicated in writing to
Executive from time to time (including through electronic means).


 


(f)              REMEDIES
FOR BREACH.  Executive expressly
agrees and understands that the remedy at law for any breach by Executive of
this Section 3 will be inadequate and that damages flowing from such
breach are not usually susceptible to being measured in monetary terms.  Accordingly, it is acknowledged that, upon
Executive’s violation of any provision of this Section 3, the Company
shall be entitled to obtain from any court of competent jurisdiction immediate
injunctive relief and obtain a temporary order restraining any threatened or
further breach as well as an equitable accounting of all profits or benefits
arising out of such violation.  Nothing
in this Section 3 shall be deemed to limit the Company’s remedies at law
or in equity for any breach by Executive of any of the provisions of this Section 3,
which may be pursued by or available to the Company.


 


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(g)             SURVIVAL
OF PROVISIONS.  The obligations
contained in Sections 3 and 11 of these Terms and Conditions and in Sections 5A
and 9A of the Employment Agreement shall, to the extent provided in such
Sections, survive the termination or expiration of Executive’s employment with
the Company and, as applicable, shall be fully enforceable thereafter in accordance
with the terms of this Agreement.  If it
is determined by a court of competent jurisdiction in any state that any
restriction in this Section 3 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention
of the parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the law of that state.


 


4.           TERMINATION OF PRIOR
AGREEMENTS.  This Agreement
constitutes the entire agreement between the parties and, as of the Effective
Date, terminates and supersedes any and all prior agreements and understandings
(whether written or oral) between the parties with respect to the subject
matter of this Agreement, including, without limitation, the Prior
Agreement.  Executive acknowledges and
agrees that neither the Company nor anyone acting on its behalf has made, and
is not making, and in executing this Agreement, Executive has not relied upon,
any representations, promises or inducements except to the extent the same is
expressly set forth in this Agreement.


 


5.           ASSIGNMENT;
SUCCESSORS.  This Agreement is
personal in its nature and none of the parties hereto shall, without the
consent of the others, assign or transfer this Agreement or any rights or
obligations hereunder; provided, that (i) the Company may assign this
Agreement to any affiliate of the Company (which affiliate clearly has
sufficient assets to satisfy the Company’s obligations under this Agreement),
and (ii) in the event of the merger, consolidation, transfer,
reorganization or sale of all, substantially all or a substantial portion of
the assets of the Company with or to any other individual or entity, this
Agreement shall, subject to the provisions hereof, be binding upon and inure to
the benefit of such successor and such successor (including the Company upon
assignment of the Agreement) shall discharge and perform all the promises,
covenants, duties, and obligations of the Company hereunder, and in the event
of any such assignment or transaction, all references herein to the “Company”
shall refer to the Company’s assignee or successor hereunder.


 


6.           WITHHOLDING.  The Company shall make such deductions and
withhold such amounts from each payment and benefit made or provided to
Executive hereunder, as may be required from time to time by applicable law,
governmental regulation or order.


 


7.           HEADING REFERENCES.  Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose. 
References to “this Agreement” or the use of the term “hereof” shall
refer to these Standard Terms and Conditions and the Employment Agreement
attached hereto, taken as a whole.


 


8.           WAIVER; MODIFICATION.  Failure to insist upon strict compliance with
any of the terms, covenants, or conditions hereof shall not be deemed a waiver
of such term, covenant, or condition, nor shall any waiver or relinquishment
of, or failure to insist upon strict compliance


 


10

















 


with, any right or power hereunder at any one or more times be deemed a
waiver or relinquishment of such right or power at any other time or
times.  This Agreement shall not be
modified in any respect except by a writing executed by each party hereto.


 


9.             SEVERABILITY.  In the event that a court of competent
jurisdiction determines that any portion of this Agreement is in violation of
any law or public policy, only the portions of this Agreement that violate such
law or public policy shall be stricken. 
All portions of this Agreement that do not violate any statute or public
policy shall continue in full force and effect. 
Further, any court order striking any portion of this Agreement shall
modify the stricken terms as narrowly as possible to give as much effect as
possible to the intentions of the parties under this Agreement.


 


10.           INDEMNIFICATION.  At all times during and after the Term, the
Company and its successors and/or assigns shall indemnify and hold Executive
harmless for acts and omissions in Executive’s capacity as an officer, director
or employee of the Company to the maximum extent permitted under applicable
law.  In addition, Executive shall be
covered as an insured, in respect of Executive’s activities on behalf of the
Company during Executive’s employment with the Company, by the Company’s
Director and Officer liability policy or other comparable policies obtained by
the Company’s successors, to the fullest extent permitted by such policies and
for the period of Executive’s employment and thereafter for the longest
applicable statute of limitations.


 


11.           NONDISPARAGEMENT.  During the Term and at all times thereafter, (i) Executive
shall not make any statements, encourage others to make statements or release
information intended to disparage or defame the Company, any of its affiliates
or any of their respective directors or officers and (ii) the Company
shall cause its senior employees not to intentionally make, or cause or
encourage others to make, any public statements or release information intended
to disparage or defame Executive’s reputation.  
Notwithstanding the foregoing, nothing in this Section 11 shall
prohibit any person from making truthful statements when required by order of a
court or other body having jurisdiction, as required by law, or made in good
faith in connection with the Company’s disclosure practices relating to
applicable securities laws.  Upon
Executive’s termination of employment for any reason, Executive and the Company
shall cooperate in good faith to agree upon any press releases made by the
Company regarding Executive’s employment with the Company, provided that the
Company and Executive may issue press releases without the consent of the other
party to the extent required by law or, in the case of the Company, as
determined by the Company in good faith in connection with the Company’s
disclosure practices relating to applicable securities laws.


 


[The Signature Page Follows]


 


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ACKNOWLEDGED AND
AGREED:


 


Date:  July 29, 2008


 


 


	
   

  	
  HSN, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Gregory Blatt

  
	
   

  	
  By: Gregory Blatt

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mindy Grossman

  
	
   

  	
   

  
	
   

  	
  Mindy Grossman

  



 

















 


EXHIBIT A


 


1.             Definitions.  Capitalized terms used in this Exhibit A
that are not otherwise defined shall have the meanings ascribed to such terms
in the Employment Agreement (the “Employment Agreement”), dated as of July 29,
2008, by and between Mindy Grossman and HSN, Inc. (“HSN” or the “Company”).  For purposes of this Exhibit A only, the
following terms shall have the meanings specified below:


 


“EBITA” has the meaning
given to it in the Company’s 2008 Stock and Annual Incentive Plan (the “Equity
Plan”).


 


“Long Term Incentive Plan”
means the long term incentive plan set forth on this Exhibit A.


 


“Maximum Bonus” means a
payout of $4,000,000.


 


2.             Long Term
Incentive Plan.


 


EBITA
Hurdles


 


Year 3:


 


·      If the cumulative compounded annual growth rate of EBITA for Years 1
through 3 (the period commencing April 1, 2008 and ending March 31,
2011) is (i) <10%, (ii) >10% but <12.5%, (iii) >12.5%
but <15% or (iv) >15%, then
Executive shall receive a payment in an amount equal to:


 


·      (i) 0%, (ii) 33%, (iii) 66% or
(iv) 100%, respectively, of 50% ($2,000,000) of the Maximum Bonus; less


 


·      25% of the gross amount that would otherwise
be payable in Year 3 for each twelve month period (April 1 through March 31)
in which the cumulative compounded annual growth rate of EBITA is <5%


 


(the net amount
determined pursuant to the immediately preceding bullets, the “Year 3 Payment”).


 


Year 4:


 


·      If the cumulative compounded annual growth rate of EBITA for Years 1
through 4 (the period commencing April 1, 2008 and ending March 31,
2012) is (i) <10%, (ii) >10% but <12.5%, (iii) >12.5%
but <15% or (iv) >15%, then
Executive shall receive (i) 0%, (ii) 33%, (iii) 66% or (iv) 100%,
respectively, of the Maximum Bonus less the
amounts set forth in the two immediately succeeding bullets:


 


·      25% of the gross amount that would otherwise
be paid in Year 4 (without regard to any payment made in Year 3) for each
twelve month period (April 1 through March 31) in which the
cumulative compounded annual growth rate of EBITA is <5%; and


 


·      the Year 3 Payment


 

















 


(the amount determined
pursuant to the immediately preceding bullets, the “Year 4 Payment”).


 


3.             Miscellaneous. 
Furthermore, for purposes only of the Long Term Incentive Plan and for
determining whether the above conditions to payment (or any applicable portion
thereof) have been met, Executive and the Company hereby acknowledge and agree
as follows:


 


(i)            in the event of an acquisition, sale or other
disposition of a significant asset (or portion of assets), business, subsidiary
and/or investment of HSN, EBITA shall, for all periods covered by this Long
Term Incentive Plan, exclude the results attributable to such significant
asset(s), business, subsidiary and/or investment;


 


(ii)           the Year 3 Payment and/or Year 4 Payment
shall be made as soon as practicable following the date on which HSN
determines the level of cumulative compounded annual growth rate of EBITA
achieved for Years 1 through 3 and Years 1 through 4, respectively, which date
shall be no later than the date on which HSN releases its earnings for the
fiscal quarter ended March 31, 2011 and March 31, 2012, respectively;


 


(iii)          notwithstanding anything in the Agreement to
the contrary, Executive shall forfeit any rights to the Year 3 Payment and/or
Year 4 Payment if Executive is not employed by the Company on the last day of
Year 3 and Year 4, respectively, unless Executive’s employment is terminated by
the Company for any reason other than Cause, or if Executive terminates her
employment for Good Reason, provided that if Executive’s employment is
terminated due to death or disability, the amount of the Year 3 and Year 4
Payments shall be pro rated to account for the portion of the period commencing
April 1, 2008 and ending March 31, 2012 during which Executive was
employed by the Company and such payments, if any, shall be made at the times
contemplated in clause (ii) above.


 


(iv)          each
amount payable pursuant to the Long Term Incentive Plan may be paid in one (1) installment
in either Common Stock or in cash, or some combination thereof, as determined
by the Company in its discretion (and in the event of any such payment in such
Common Stock, the amount of such Common Stock will be based on the closing
price of such Common Stock for the trading day prior to payment of the
applicable bonus and will be rounded down to the nearest whole share); provided
that any such Common Stock shall be issued pursuant to the Equity Plan or
otherwise be registered and freely tradable by Executive; and


 


(v)           for the avoidance of
doubt, Section 5 of the Standard Terms and Conditions of the Employment
Agreement shall apply to the payment of amounts pursuant to the Long Term
Incentive Plan and, in accordance with such section, the number of shares of
Common Stock issued as part of any Common Stock portion of each such amount
shall be net of the minimum number of such shares (rounded up to the next whole
number) of Common Stock sufficient to cover the amount of withholding taxes
Executive is required to pay as a result of receipt of such Common Stock
portion of each such amount; cash payments hereunder shall also be subject to
applicable withholdings.


 


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4.             Recoupment
in Certain Circumstances. 
Notwithstanding anything to the contrary herein or in the Employment Agreement,
in the event that, at any time during the period beginning the date on which
the Year 3 Payment or the Year 4 Payment, as applicable, is paid to Executive
and ending on the earlier of (i) the third anniversary of the applicable
payment date or (ii) a Change of Control (as such term is defined in the
Equity Plan) the conditions described in either paragraph (A) and/or
paragraph (B) below exist, the Company shall have the right to recoup the
Year 3 Payment and/or the Year 4 Payment, as applicable, up to the amount
specified in paragraph (A) or paragraph (B) below, as applicable, net
of any income, withholding, social security or other taxes already paid in
respect of Executive’s receipt of such amount (provided, that if, following the
Company’s recoupment of the amount, Executive successfully claims a tax
deduction in respect of the amount recouped by the Company, the Executive shall
pay to the Company an additional amount equal to the tax deduction she
receives).


 


(A) At least
2/3 of the Board (excluding Executive) determines in good faith that there was
a material inaccuracy in the determination of cumulative compounded annual growth rate of
EBITA for the applicable period on the basis of which the Year 3 Payment or the
Year 4 Payment, as the case may be, was calculated.  If the Company’s right to recoupment is
asserted based on the conditions in this paragraph (A), the Company shall have
the right to recoup no more than the amount by which the Year 3 Payment and/or
the Year 4 Payment, as the case may be, exceeded the payment that would have
been made absent such inaccuracy.


 


(B)  At least 2/3 of the Board (excluding Executive)
determines in good faith that, at any time prior to the payment of the Year 3
Payment and/or the Year 4 Payment, as applicable, Executive committed any
action(s) or inaction(s) that constituted Cause.  If the
Company’s right to recoupment is asserted based on the conditions in this
paragraph (B), the Company shall have the right to recoup up to the full amount
of the Year 3 Payment and/or the Year 4 Payment, as applicable.


 


Prior to making the
determination described in paragraph (A) or paragraph (B) above, the
Board shall provide Executive with written notice, in accordance with Section 4A
of the Agreement, specifically identifying the act(s) or inaction(s) alleged
to constitute Executive’s misconduct or Cause, as the case may be, and
Executive shall have the opportunity within ten (10) days of the provision
of such notice to be heard by the Board of Directors.


 


A-3