TripAdvisor 2011 Annual Report Download - page 62

Download and view the complete annual report

Please find page 62 of the 2011 TripAdvisor annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 125

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125

Table of Contents
Prior to the expiration of the three-
year term, the standstill restrictions, including the cap on ownership described above, would terminate at
the earlier of (i) Mr. Diller and his affiliates “actually owning”
securities representing more than 50% of the total voting power of TripAdvisor or
(ii) the Block Sale transferee and its affiliates beneficially owning (as defined in the Governance Agreement) securities representing less than
12% of the total voting power of TripAdvisor and Mr. Diller beneficially owning (as defined in the Governance Agreement) securities
representing more than 40% of the total voting power of TripAdvisor. For this purpose, securities “actually owned” by Mr. Diller and his
affiliates will include all of our securities held by Mr. Diller and his “affiliates”, plus those shares of Class B Common Stock for which
Mr. Diller and his “affiliates” have a right to “swap” shares of Common Stock (as discussed below) but for which the swap right has not been
exercised, minus the securities Mr. Diller and his “affiliates” currently hold but would need to exchange for the Class B Common Stock in such
swap right.
The above restrictions may be waived at any time by TripAdvisor, acting through a committee of independent directors.
Other Block Sale Provisions
Any Block Sale by Liberty within the two years immediately following the completion of the Spin-Off will require our consent and the
consent of Expedia. We and Expedia will not withhold our or their consent to such Block Sale if we and Expedia determine in good faith (a) that
a safe harbor exists for the Block Sale under Section 355(e) of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder, or (b) that during the two years immediately prior to the Spin-Off there were no substantial negotiations with the
transferee in such Block Sale regarding the Block Sale.
If Mr. Diller does not acquire from Liberty all shares of Class B Common Stock proposed to be transferred in a Block Sale or in a transfer
of all of the Class B Common Stock and Common Stock beneficially owned by Liberty through the exercise of his “swap” rights or right of first
refusal under the Stockholders Agreement (resulting in such Class B Common Stock of Liberty being converted into, or exchanged for, shares of
our Common Stock before the Block Sale), for a period of two years after the Block Sale, Mr. Diller will have the right from time to time to
acquire from us an equal number of shares of Class B Common Stock held in treasury, either by purchase at fair market value, through an
exchange of an equivalent number of shares of Common Stock, or a combination thereof. Mr. Diller may exercise this right either alone or in
conjunction with one or more third-
parties so long as Mr. Diller retains voting control over the Class B Common Stock acquired. Prior to the two
year period following a Block Sale, Mr. Diller
’s right to acquire Class B Common Stock from us will be suspended immediately upon the entry
by us into a merger agreement providing for a merger that constitutes a change of control of TripAdvisor, and will terminate irrevocably upon
the consummation of a tender or exchange offer for securities representing a majority of our total voting power or a merger that constitutes a
change of control of TripAdvisor.
Certain Waivers
During the term of the Stockholders Agreement, without our consent (to be exercised by a committee of independent directors), Mr. Diller
will not waive Liberty’s obligation under the Stockholders Agreement to convert or exchange its shares of Class B Common Stock to shares of
Common Stock in specified circumstances. This consent right is not applicable if Mr. Diller no longer has any rights under the Stockholders
Agreement. In certain circumstances this consent right will survive a mutual termination of the Stockholders Agreement for a period of up to one
year.
Termination
Generally, the Governance Agreement will terminate:
58
•
With respect to Liberty, at such time that Liberty beneficially owns equity securities representing less than 5% of our total equity
securities; and
•
With respect to Mr. Diller, at such time as Mr. Diller ceases to be our Chairman or becomes disabled.