TripAdvisor 2011 Annual Report Download - page 61

Table of Contents
transfer the transferee acquires beneficial ownership of our equity securities representing less than 5% of our outstanding equity securities, but
having at least $250 million in then-
current market value, Liberty or Mr. Diller may assign one of its or his remaining demand registration rights,
which the transferee may exercise only in connection with an offering of our shares of Common Stock having $100 million or more in market
value.
Inapplicability of Anti
-Takeover Provisions to Distribution Transaction or Block Sale
Pursuant to the Governance Agreement, we will not, in the case of a Distribution Transaction (as discussed below), implement any anti-
takeover provision (including any shareholder rights plan) or, in the case of a Block Sale (as discussed below), will render inapplicable any such
anti-takeover provision:
In addition, our Board of Directors will approve the transfer of Class B Common Stock and Common Stock in a Distribution Transaction
or Block Sale (up to a 30% ownership level in the case of a Block Sale) for purposes of Section 203 of the Delaware General Corporation Law,
or the DGCL, which is the prohibition on transactions with interested stockholders under Delaware state law. In the case of a Block Sale,
however, such approval for purposes of Section 203 of the DGCL will be subject to the imposition of contractual restrictions on the Block Sale
transferee analogous to the provisions of Section 203 of the DGCL (as further described below).
Restrictions on Block Sale Transferee
For three years following a Block Sale by Liberty, the transferee will be subject to the following restrictions with regard to us, unless the
restrictions terminate early in the circumstances discussed below:
The contractual provisions mirroring Section 203 of the DGCL would not apply to the transferee if upon the Block Sale it would not be an
“interested stockholder” (as determined pursuant to Section 203 of the DGCL) of TripAdvisor. However, if these contractual provisions become
applicable at the time of the Block Sale, they will continue in effect for the term of the standstill restrictions even if the transferee would
subsequently cease to qualify as an “interested stockholder” (
as determined pursuant to Section 203 of the DGCL). The standstill restrictions and
30% ownership cap, as well as the termination provisions, would apply to subsequent transferees of all or substantially all of the shares
transferred in a prior Block Sale, but in any event would not extend past the third anniversary of the original Block Sale. With respect to such
unaffiliated subsequent transferees of the shares transferred in a prior Block Sale, the statutory (rather than contractual) anti-takeover restrictions
of Section 203 of the DGCL would apply subject to the waiver, at the time of a transfer, by us.
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•
The purpose or reasonably evident effect of which is to restrict or limit Liberty
’
s ability to engage in a Distribution Transaction or a
Block Sale; or
•
The purpose or reasonably evident effect of which is to impose a material economic detriment on us to which our equity securities
are transferred in connection with a qualifying Distribution Transaction (and whose shares are distributed to the public stockholders
of Liberty) or that would impose a material economic detriment on the transferee in a Block Sale.
• An ownership cap set at 30% of our total equity securities of (which would apply to any “group” of which the transferee or its
affiliates is a member), subject to adjustment under certain circumstances;
• Specified “standstill” restrictions limiting the transferee’s ability, at such time as any directors nominated by the transferee are
serving on our Board of Directors, to, among other things, engage in proxy contests, propose transactions involving us, form a
“group” (as defined in the Securities Exchange Act of 1934) or influence our management. These restrictions, other than the
prohibition on proxy contests, would terminate if the transferee relinquishes all rights to nominate directors under the Governance
Agreement; and
•
Contractual provisions analogous to the provisions of Section 203 of the DGCL that would prohibit the transferee from engaging in
specified “business combination” transactions with us without our prior approval, acting through a committee of independent
directors.