TripAdvisor 2012 Annual Report Download - page 31

LLC. The agreements that govern the term loan and revolving credit facility contain various covenants, including
those that limit our ability to, among other things:
• Incur indebtedness;
• Pay dividends on, redeem or repurchase our capital stock;
• Enter into certain asset sale transactions, including partial or full spin-off transactions;
• Enter into secured financing arrangements;
• Enter into sale and leaseback transactions; and
• Enter into unrelated businesses.
These covenants may limit our ability to optimally operate our business.
In addition, our term loan and revolving credit facility require that we meet certain financial tests, including
an interest coverage test and a leverage ratio test.
Any failure to comply with the restrictions of our term loan credit facility may result in an event of default
under the agreements governing such facilities. Such default may allow the creditors to accelerate the debt
incurred under thereunder. In addition, lenders may be able to terminate any commitments they had made to
supply us with further funds (including periodic rollovers of existing borrowings).
Conflicts of interest, or the appearance of conflicts of interest, may develop between the management and
directors of Expedia, on the one hand, and our management and directors, on the other hand.
Some members of the management and some directors of Expedia and TripAdvisor own both Expedia
capital stock and our capital stock. In addition, Liberty Interactive Corporation controls the vote of
approximately 56.6% of the combined voting power of our outstanding capital stock and also owns a significant
number of shares of Expedia common stock. In addition, Mr. Diller serves as a director of TripAdvisor as well as
Chairman and Senior Executive of Expedia. These circumstances could create, or appear to create, potential
conflicts of interest when Expedia’s and our directors and executive officers face decisions that could have
different implications for Expedia and us. For example, potential conflicts of interest could arise in connection
with the resolution of any dispute between Expedia and us regarding terms of the agreements governing the Spin-
Off and our relationship with Expedia following the Spin-Off, including the separation agreement, the employee
matters agreement, the tax sharing agreement, the transition services agreement between us and Expedia or any
commercial agreements between us and Expedia. Potential conflicts of interest could also arise if we enter into
commercial arrangements with Expedia in the future.
We have adopted “corporate opportunity” provisions in our amended and restated certificate of
incorporation that generally provide that no officer or director of TripAdvisor who is also an officer or director of
Expedia will be liable to TripAdvisor or its stockholders for breach of any fiduciary duty by reason of the fact
that any such individual directs a corporate opportunity to Expedia instead of TripAdvisor, or does not
communicate information to TripAdvisor regarding a corporate opportunity that the officer or director has
directed to Expedia. In addition, Expedia’s amended and restated certificate of incorporation renounces any
interest or expectancy in certain corporate opportunities, which generally have the effect that no officer or
director of Expedia who is also an officer or director of TripAdvisor will be liable to Expedia or its stockholders
for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to
us instead of Expedia, or does not communicate information to Expedia regarding a corporate opportunity that
the officer or director has directed to us. The corporate opportunity provisions may have the effect of
exacerbating the risk of conflicts of interest between Expedia and us because the provisions effectively shield an
overlapping director/executive officer from liability for breach of fiduciary duty in the event that such director or
officer chooses to direct a corporate opportunity to us instead of to Expedia or vice versa.
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