TripAdvisor 2011 Annual Report Download - page 63

Table of Contents
With respect to the provisions governing Contingent Matters, such provisions will terminate as to Mr. Diller and Liberty as set forth under
the section entitled Contingent Matters above.
Distribution Transactions
Liberty will be permitted to spin-off or split-off to its public stockholders all (but not less than all) of its equity ownership in TripAdvisor
in a transaction meeting specified requirements without first complying with the transfer restrictions under the Stockholders Agreement,
including Mr. Diller’s tag-along right, right of first refusal, swap right and conversion requirement, and without being subject to the application
of certain anti-takeover provisions, as described above under The Governance Agreement—Inapplicability of Anti-Takeover Provisions to
Distribution Transaction or Block Sale
. Such transaction is referred to herein as a Distribution Transaction. The spun-off or split-off company
will be required to assume all of Liberty’s obligations (including the proxy given to Mr. Diller under the Stockholders Agreement) and will
succeed to Liberty’s rights under the Governance Agreement and Stockholders Agreement (including Liberty’s right to nominate directors).
Block Sales
So long as Liberty’s equity ownership in us does not exceed 30% of our total equity securities and Mr. Diller continues to hold a proxy
over Liberty’s shares in TripAdvisor under the Stockholders Agreement, Liberty will be permitted to sell all (but not less than all) of such equity
interest in us to an unaffiliated third party, without being subject to the application of certain anti-takeover provisions, as described above under
The Governance Agreement—Inapplicability of Anti-Takeover Provisions to Distribution Transaction or Block Sale
, subject to prior compliance
with Mr. Diller’s tag-along right, right of first refusal and swap right under the Stockholders Agreement, as well as the requirement that Liberty
convert shares of Class B Common Stock to shares of Common Stock or exchange them for Common Stock with us before the Block Sale. Such
sale of equity interest is referred to herein as a Block Sale.
Prior to any Block Sale, Liberty will be required to exchange and/or convert any shares of Class B Common Stock proposed to be
transferred in such Block Sale, to the extent Mr. Diller does not acquire such shares pursuant to exercise of his right of first refusal or swap
rights, for newly-issued Common Stock (subject to application of relevant securities laws).
Relationship Between us, Mr. Diller and Liberty
Mr. Diller is our Senior Executive and Chairman of the Board of Directors. Mr. Diller and Liberty are parties to the Stockholders
Agreement. Among other arrangements, under the terms of the Stockholders Agreement, Liberty grants to Mr. Diller an irrevocable proxy with
respect to all of our securities beneficially owned by Liberty on all matters submitted to a stockholder vote or by which the stockholders may act
by written consent (other than with respect to Contingent Matters with respect to which Liberty has not consented), until such proxy terminates
in accordance with the terms of the Stockholders Agreement. As a result of the arrangements contemplated by the Stockholders Agreement, as of
December 31, 2011, Mr. Diller controlled approximately 62.4% of the combined voting power of our capital stock and can effectively control
the outcome of all matters submitted to a vote or for the consent of our stockholders (other than with respect to the election by the holders of our
Common Stock of 25% of the members of our Board of Directors and matters to which Delaware law requires a separate class vote). Upon
Mr. Diller ceasing to serve in his capacity as our Chairman, or his becoming disabled, Liberty may effectively control the voting power of our
capital stock through its ownership of our Common Shares. We are subject to the Marketplace Rules of The NASDAQ Stock Market LLC, or the
Marketplace Rules. The Marketplace Rules exempt “controlled companies,” or companies of which more than 50% of the voting power is held
by an individual, group or another company, from certain requirements. Based on the arrangements described above, we are relying on the
exemptions for controlled companies from applicable Marketplace Rules.
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