TripAdvisor 2012 Annual Report Download - page 113

stock of 25% of the members of Expedia’s Board of Directors and matters as to which Delaware law requires a
separate class vote). As a result, from the completion of the Spin-Off until December 11, 2012, TripAdvisor and
Expedia were related parties since they were under common control. On December 11, 2012, as a result of the
purchase by Liberty of an aggregate of 4,799,848 shares of common stock of TripAdvisor from Mr. Diller and
certain of his affiliates which is described in further detail below under “—Liberty and Barry Diller”, Expedia
and TripAdvisor are no longer under common control. However, Expedia continues to be a related party to
TripAdvisor due to Liberty’s ownership of Expedia stock.
For purposes of governing certain of the ongoing relationships between us and Expedia at and after the
Spin-Off, and to provide for an orderly transition, we and Expedia have entered into various agreements,
including, among others, the Separation Agreement; the Tax Sharing Agreement, the Employee Matters
agreement, the Transition Services Agreement, and commercial agreements. The various commercial
agreements, including click-based advertising agreements, content sharing agreements and display-based and
other advertising agreements, had terms of up to one year. The full texts of the Separation Agreement, the Tax
Sharing Agreement, the Employee Matters Agreement, the Transition Services Agreement and the Master
Advertising Agreement (CPC) are incorporated by reference in this Annual Report on Form 10-K as Exhibits 2.1,
10.2, 10.3, 10.4 and 10.6 (10.6 filed in redacted form pursuant to confidential treatment request),
respectively. We continue to work together with Expedia pursuant to various commercial agreements between
subsidiaries of TripAdvisor, on the one hand, and subsidiaries of Expedia, on the other hand.
Liberty and Barry Diller
On December 20, 2011, in connection with the Spin-Off, we entered into a governance agreement (the
“Governance Agreement”) with Liberty Interactive Corporation (“Liberty”) and Barry Diller, our former
Chairman of the Board of Directors and our Senior Executive. The summary of the material terms of the
Governance Agreement are qualified in their entirety by the full text of the Governance Agreement, which is
incorporated by reference on this Annual Report on Form 10-K as Exhibit 10.1. In addition, Liberty and
Mr. Diller entered into a stockholders agreement, dated December 20, 2011 (the “Stockholders Agreement”),
pursuant to which, among other things, Liberty granted to Mr. Diller an irrevocable proxy (the “Proxy”) with
respect to all of TripAdvisor’s 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 had not consented).
By virtue of the Proxy, as well as through shares owned by Mr. Diller directly, Mr. Diller was effectively
able to control the outcome of all matters submitted to a vote or for the consent of TripAdvisor’s stockholders
(other than with respect to the election by the holders of TripAdvisor common stock of 25% of the members of
TripAdvisor’s Board of Directors and matters as to which Delaware law requires a separate class vote).
Additionally, Mr. Diller was the Chairman and Senior Executive of Expedia, and through similar arrangements
between Mr. Diller and Liberty, Mr. Diller was effectively able to control the outcome of all matters submitted to
a vote or for the consent of Expedia’s stockholders (other than with respect to the election by the holders of
Expedia common stock of 25% of the members of Expedia’s Board of Directors and matters as to which
Delaware law requires a separate class vote). As a result, from the completion of the Spin-Off until December 11,
2012, TripAdvisor and Expedia were related parties since they were under common control.
On December 11, 2012, Liberty purchased an aggregate of 4,799,848 shares of common stock of
TripAdvisor from Mr. Diller and certain of his affiliates (the “Stock Purchase”). Effective upon completion of the
Stock Purchase, Mr. Diller resigned as Chairman and the Senior Executive of TripAdvisor, but continues to serve
as a non-employee director. As a result of the completion of the Stock Purchase: (i) the Stockholders Agreement
has, in accordance with its terms, terminated, (ii) the Proxy has terminated and Mr. Diller no longer has the right
to vote the shares of TripAdvisor common stock and Class B common stock beneficially owned by Liberty, and
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