AGREEMENT
AND
PLAN OF MERGER
by and among
CENDANT CORPORATION,
PHH CORPORATION,
AVIS ACQUISITION CORP.
and
AVIS GROUP HOLDINGS, INC.
dated as of November 11, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER
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1.1 The Merger........................................................................2
1.2 Effective Time....................................................................2
1.3 Closing of the Merger.............................................................3
1.4 Effects of the Merger.............................................................3
1.5 Certificate of Incorporation and By-laws..........................................3
1.6 Directors.........................................................................3
1.7 Officers..........................................................................4
1.8 Subsequent Actions................................................................4
ARTICLE II CONVERSION OF SHARES
2.1 Conversion of Shares..............................................................4
2.2 Delivery of Merger Consideration..................................................5
2.3 Dissenting Shares.................................................................7
2.4 Treatment of Company Options......................................................8
2.5 Adjustments.......................................................................9
2.6 Stockholders Meeting..............................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization.....................................................................12
3.2 Authority Relative to this Agreement.............................................12
3.3 Vote Required....................................................................13
3.4 State Takeover Statutes..........................................................13
3.5 Capitalization...................................................................13
3.6 Subsidiaries.....................................................................15
3.7 No Conflict; Required Filings and Consents.......................................15
3.8 SEC Documents and Financial Statements...........................................16
3.9 No Undisclosed Liabilities.......................................................17
3.10 Absence of Certain Changes.......................................................17
3.11 Proxy Statement..................................................................17
3.12 Litigation.......................................................................17
3.13 Taxes............................................................................18
3.14 Employee Benefit Plans...........................................................19
3.15 Compliance with Applicable Laws..................................................21
3.16 Material Contracts...............................................................22
3.17 Environmental Laws...............................................................23
3.18 Intellectual Property............................................................25
3.19 Labor Matters....................................................................26
3.20 Brokers or Finders...............................................................27
ARTICLE IVREPRESENTATIONS AND WARRANTIES OF PARENT,
PHH AND MERGER SUB
4.1 Organization.....................................................................27
4.2 Authority Relative to this Agreement.............................................27
4.3 No Conflict; Required Filings and Consents.......................................28
4.4 Proxy Statement..................................................................29
4.5 Litigation.......................................................................29
4.6 Financing........................................................................29
4.7 Brokers or Finders...............................................................29
ARTICLE V COVENANTS
5.1 Conduct of Business by the Company Pending
the Merger.......................................................................30
5.2 No Solicitation..................................................................33
5.3 Access to Information; Confidentiality...........................................36
5.4 Consents; Approvals..............................................................37
5.5 Indemnification and Insurance....................................................37
5.6 Employee Benefits................................................................40
5.7 Note Tender Offer................................................................41
5.8 Notification of Certain Matters..................................................42
5.9 Further Action...................................................................42
5.10 Public Announcements.............................................................42
5.11 Transfer Taxes...................................................................43
5.12 Financial Statements.............................................................43
5.13 Section 16 Matters...............................................................43
PAGE
ARTICLE VI CONDITIONS TO THE MERGER
6.1 Conditions to Each Party's Obligation to Effect
the Merger.......................................................................43
6.2 Conditions to Obligations of the Company to Effect
the Merger.......................................................................44
6.3 Conditions to Obligations of Parent and Merger Sub to
Effect the Merger................................................................45
ARTICLE VII TERMINATION
7.1 Termination......................................................................46
7.2 Effect of Termination............................................................48
7.3 Fees and Expenses................................................................49
ARTICLE VIII GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements........................50
8.2 Notices..........................................................................50
8.3 Assignment; Binding Effect.......................................................52
8.4 Entire Agreement.................................................................53
8.5 Amendment........................................................................53
8.6 Governing Law; Consent to Jurisdiction...........................................53
8.7 Counterparts.....................................................................53
8.8 Headings.........................................................................54
8.9 Interpretation...................................................................54
8.10 Waivers..........................................................................54
8.11 Incorporation of Annex and Disclosure Letters....................................55
8.12 Severability.....................................................................55
8.13 Enforcement of Agreement.........................................................55
8.14 Waiver of Jury Trial.............................................................55
8.15 Execution........................................................................56
8.16 Date for any Action..............................................................56
8.17 Parties in Interest..............................................................56
8.18 Certain Definitions..............................................................56
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
November 11, 2000, is by and among Cendant Corporation, a Delaware corporation
("Parent"), PHH Corporation, a Maryland corporation and an indirect wholly owned
Subsidiary (as defined below) of Parent ("PHH"), Avis Acquisition Corp., a
Delaware corporation and a wholly owned Subsidiary of PHH ("Merger Sub"), and
Avis Group Holdings, Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, Cendant Car Holdings, Inc., a Delaware corporation and an
indirect, wholly owned Subsidiary of Parent ("Car Holdings"), is the beneficial
owner of 5,535,800 shares of class A common stock, par value $.01 per share, of
the Company (the "Company Common Stock"), which represents approximately 17.8%
of the outstanding shares of Company Common Stock;
WHEREAS, Parent and PHH have proposed that PHH acquire (the
"Acquisition") all of the issued and outstanding shares of Company Common Stock
not beneficially owned (within the meaning of Rule 13d-3 of the Exchange Act (as
defined below)) by Parent, PHH, Merger Sub, Car Holdings or any other direct or
indirect Subsidiary of Parent (collectively, the "Acquisition Group") (such
outstanding shares of Company Common Stock not owned by the Acquisition Group
being referred to herein as the "Shares");
WHEREAS, in furtherance of the Acquisition, it is proposed that Merger
Sub shall be merged with and into the Company, with the Company continuing as
the surviving corporation (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and upon the terms and
subject to the conditions set forth herein;
WHEREAS, a special committee of the board of directors of the Company
(the "Board"), consisting entirely of nonmanagement directors of the Company who
are not Affiliates (as defined below) of the Acquisition Group (the "Independent
Committee"), was established for, among other purposes, the purpose of
evaluating the Acquisition and making a recommendation to the Board with regard
to the Acquisition;
WHEREAS, the Independent Committee has received the opinion of Morgan
Stanley & Co., Incorporated ("Morgan Stanley"), financial advisor to the
Independent Committee, that, as of the date hereof, the consideration to be
received by the holders of Shares pursuant to the Merger is fair to such holders
from a financial point of view;
WHEREAS, the Board, based on the unanimous recommendation of the
Independent Committee, has, in light of and subject to the terms and conditions
set forth herein, (i) determined that (x) the Merger Consideration (as defined
below), is fair to the holders of Shares and (y) the Merger is advisable and in
the best interests of the Company and the holders of Shares; (ii) approved, and
declared the advisability of, this Agreement and (iii) determined to recommend
that the stockholders of the Company vote to adopt this Agreement;
WHEREAS, the respective boards of directors of Parent, PHH and Merger
Sub have approved this Agreement; the board of directors of Merger Sub has
declared the advisability of the Agreement; and PHH, as the sole stockholder of
Merger Sub, has adopted this Agreement; and
WHEREAS, the Company, Parent, PHH and Merger Sub desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and the other transactions contemplated hereby (collectively, the
"Transactions") and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined below), and upon the
terms and subject to the conditions of this Agreement and in accordance with the
DGCL, Merger Sub shall be merged with and into the Company. Following the
Merger, the Company shall continue as the surviving corporation (the "Surviving
Corporation") and as a wholly owned subsidiary of PHH, and the separate
corporate existence of Merger Sub shall cease in accordance with the DGCL.
1.2 Effective Time. Subject to the provisions of this Agreement, the
parties shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware in such form as required by, and executed in accordance with, the
relevant provisions of the DGCL as soon as practicable on or after the Closing
Date (as defined below). The Merger shall become effective upon such filing or
at such time thereafter as is agreed by Parent and the Independent Committee and
provided in the Certificate of Merger (the "Effective Time," and the date of
such effectiveness shall be the "Effective Date").
1.3 Closing of the Merger. The closing of the Merger (the "Closing")
shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
Four Times Square, New York, New York, at 10:00 a.m. (local time) on a date to
be specified by the parties, which shall be no later than the second Business
Day after satisfaction or waiver (as permitted by this Agreement and applicable
law) of all of the conditions set forth in Article VI hereof (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) (the "Closing Date"), unless
another time, date or place is agreed by Parent and the Independent Committee in
writing.
1.4 Effects of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.5 Certificate of Incorporation and By-laws. At the Effective Time,
the Amended and Restated Certificate of Incorporation of the Company shall be
amended and restated in its entirety to read as set forth in Annex A and, as so
amended, shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended as provided by law and such certificate of
incorporation, subject to the provisions of Section 5.5. The by-laws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the by-laws
of the Surviving Corporation until thereafter amended in accordance with its
terms, and as provided by applicable law, and the certificate of incorporation
of the Surviving Corporation, subject to the provisions of Section 5.5.
1.6 Directors. The directors of Merger Sub at the Effective Time, from
and after the Effective Time, shall be the directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation until such director's
successor is duly elected and qualified in the manner provided in the Surviving
Corporation's certificate of incorporation and by-laws, or as otherwise provided
by applicable law.
1.7 Officers. The officers of the Company at the Effective Time, from
and after the Effective Time, shall be the officers of the Surviving Corporation
until such officer's successor is duly elected or appointed and qualified in the
manner provided in the Surviving Corporation's certificate of incorporation and
by-laws, or as otherwise provided by applicable law.
1.8 Subsequent Actions. If, at any time after the Effective Time, the
Surviving Corporation shall determine or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either the Company or Merger Sub, all such deeds, bills of sale,
instruments of conveyance, assignments and assurances and to take and do, in the
name and on behalf of the Company, Merger Sub or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger, and without any action on the part of the holder thereof:
(a) subject to Section 2.3, each Share issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive an amount in cash, without interest, equal to thirty-three United States
Dollars ($33.00) (the "Merger Consideration") in the manner provided in Section
2.2 hereof;
(b) each Share issued and held in the Company's treasury or held by
any Subsidiary of the Company immediately prior to the Effective Time shall, by
virtue of the Merger, cease to be outstanding and shall be cancelled and retired
without payment of any consideration therefor;
(c) each share of Company Common Stock held by any member of the
Acquisition Group immediately prior to the Effective Time shall be converted
into and become one fully paid and nonassessable share of common stock of the
Surviving Corporation; and
(d) each share of common stock, par value $.01 per share, of Merger
Sub ("Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
2.2 Delivery of Merger Consideration.
(a) Immediately prior to the Effective Time, Parent and PHH shall
deposit or cause to be deposited in trust (the "Payment Fund") with an agent
designated by Parent and reasonably satisfactory to the Independent Committee
(the "Payment Agent") for the benefit of the holders of certificates
representing the Shares issued and outstanding as of the Effective Time
(collectively, "Certificates"), the aggregate Merger Consideration to be paid in
respect of the Shares. The Payment Fund shall not be used for any other purpose.
The Payment Fund shall be invested by the Payment Agent, as directed by the
Surviving Corporation, in (i) obligations of or guaranteed by the United States,
and (ii) certificates of deposit, bank repurchase agreements and bankers'
acceptances of any bank or trust company organized under federal law or under
the law of any state of the United States or of the District of Columbia that
has capital, surplus and undivided profits of at least $1 billion or in money
market funds which are invested substantially in such investments. Any net
earnings with respect thereto shall be paid to the Surviving Corporation as and
when requested by the Surviving Corporation.
(b) As soon as reasonably practicable after the Effective Time, Parent
shall instruct the Payment Agent to mail to each holder of record of Shares
immediately prior to the Effective Time (excluding any Shares cancelled pursuant
to Section 2.1 hereof):
(i) a letter of transmittal (the "Letter of Transmittal") (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of such Certificates to the Payment
Agent and shall be in such form and have such other provisions as Parent
reasonably specifies), and
(ii) instructions for use in effecting the surrender of each
Certificate in exchange for the Merger Consideration with respect to each of the
Shares formerly represented thereby.
(c) Parent and the Surviving Corporation shall cause the Payment Agent
to pay to the holders of a Certificate, as soon as practicable after receipt of
any Certificate (or in lieu of any such Certificate which has been lost, stolen
or destroyed, an affidavit of lost, stolen or destroyed share certificates
(including customary indemnity or bond against loss) in form and substance
reasonably satisfactory to Parent) together with the Letter of Transmittal, duly
executed, and such other documents as Parent or the Payment Agent reasonably
request, in exchange therefor a check in the amount equal to the Merger
Consideration multiplied by the number of Shares represented by such
Certificate. No interest shall be paid or accrued on any cash payable upon the
surrender of any Certificate. Each Certificate surrendered in accordance with
the provisions of this Section 2.2(c) shall be cancelled forthwith.
(d) In the event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company, the Merger Consideration may
be paid to the transferee only if (i) the Certificate representing such Shares
surrendered to the Payment Agent in accordance with Section 2.2(c) hereof is
properly endorsed for transfer or is accompanied by appropriate and properly
endorsed stock powers and is otherwise in proper form to effect such transfer,
(ii) the Person requesting such transfer pays to the Payment Agent any transfer
or other taxes payable by reason of such transfer or establishes to the
satisfaction of the Payment Agent that such taxes have been paid or are not
required to be paid, and (iii) such Person establishes to the reasonable
satisfaction of Parent that such transfer would not violate any applicable
federal or state securities laws.
(e) Subject to Section 2.3, at and after the Effective Time, each
holder of a Certificate that represented issued and outstanding Shares
immediately prior to the Effective Time shall cease to have any rights as a
stockholder of the Company, except for the right to surrender his or her
Certificate in exchange for the Merger Consideration multiplied by the number of
Shares represented by such Certificate. At the Effective Time, the stock
transfer books of the Company shall be closed, except as otherwise provided by
applicable law, and no transfer of Shares shall be made on the stock transfer
books of the Surviving Corporation. If, after the Effective Time, Certificates
are presented to the Surviving Corporation or the Payment Agent for any reason,
they shall be cancelled and exchanged as provided in this Article II, except as
otherwise provided by applicable law.
(f) The Merger Consideration paid in the Merger shall be net to the
holder of Shares in cash, and without interest thereon, subject to reduction
only for any applicable withholding Taxes (as defined below).
(g) Promptly following the date which is 180 days after the Effective
Date, the Payment Agent shall deliver to the Surviving Corporation all cash
(including any interest received with respect thereto), Certificates and other
documents in its possession relating to the transactions contemplated hereby,
and the Payment Agent's duties shall terminate. Thereafter, each holder of a
Certificate (other than Certificates representing Dissenting Shares (as defined
below)) may surrender such Certificate to the Surviving Corporation and (subject
to any applicable abandoned property, escheat or similar law) receive in
consideration therefor (and only as general creditors thereof) the aggregate
Merger Consideration relating thereto, without any interest thereon.
Notwithstanding the foregoing, no member of the Acquisition Group, nor the
Surviving Corporation, the Company or the Payment Agent shall be liable to a
holder of a Certificate for any Merger Consideration properly delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) Any portion of the Merger Consideration made available to the
Payment Agent pursuant to Section 2.2(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to Parent or PHH upon demand.
2.3 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, Shares that are issued and outstanding immediately before the
Effective Time and that are held by stockholders who have not voted in favor of
the adoption of this Agreement or consented thereto in writing and who have
properly exercised appraisal rights with respect thereto in accordance with
Section 262 of the DGCL shall not be converted into the right to receive the
Merger Consideration as provided in Section 2.1, unless such holders fail to
perfect or withdraw or otherwise lose their rights to appraisal. Instead,
ownership of such Shares shall entitle the holder thereof to receive the
consideration determined pursuant to Section 262 of the DGCL; provided, however,
that if such holder fails to perfect or effectively withdraws such holder's
right to appraisal and payment under the DGCL, each of such Shares shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration, without any interest thereon, upon
surrender of the Certificate or Certificates in the manner provided in Section
2.2 hereof. The Company shall give Parent (i) prompt notice of any demands (or
withdrawals of demands) for appraisal of any Shares received by the Company
pursuant to the applicable provisions of the DGCL and any other instruments
served pursuant to the DGCL and received by the Company and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such demands for appraisal or offer
to settle, or settle, any such demands.
2.4 Treatment of Company Options.
(a) Subject to Section 2.4(b), the Company shall take all action
necessary so that each option to purchase shares of Company Common Stock (each,
an "Option") granted under the Company's 1997 Stock Option Plan and 2000
Incentive Compensation Plan (collectively, the "Assumed Option Plans" and,
individually, an "Assumed Option Plan") outstanding and unexercised immediately
prior to the Effective Time shall be cancelled immediately prior to the
Effective Time in exchange for the right to receive an amount in cash equal to
the product of (i) the number of shares of Company Common Stock subject to such
Option immediately prior to the Effective Time and (ii) the excess, if any, of
the Merger Consideration over the per share exercise price of such Option, to be
delivered by the Surviving Corporation promptly following the Effective Time.
All applicable withholding taxes attributable to the payments made hereunder
shall be deducted from the amounts payable under this Section 2.4.
Notwithstanding the foregoing, or Section 2.4(b), any Option with an exercise
price greater than the Merger Consideration immediately prior to the Effective
Time shall be automatically converted into an Assumed Option in accordance with
Section 2.4(c), whether or not the holder thereof shall have made a Retention
Election with respect to such Option in accordance with Section 2.4(b). The
Company shall use its commercially reasonable efforts to obtain the consent of
each holder of Options to the foregoing treatment of such Options to the extent
required under the Assumed Option Plans pursuant to which such Options were
granted.
(b) Notwithstanding the provisions of Section 2.4(a), each person who,
on or prior to the Effective Date, is the holder of an outstanding and
unexercised Option shall be entitled, with respect to all or any portion of such
holder's Option, to make an unconditional election to the Company in writing (a
"Retention Election") on or prior to the Effective Date, to convert, as of the
Effective Time, such portion of their Options as may be specified in such
Retention Election into options to purchase shares of common stock, par value
$.01 per share, of Parent ("Cendant Common Stock"), as set forth in subsection
(c) below, in lieu of receiving a cash payment, if any, in consideration for the
cancellation of such portion of their Options in the manner described in Section
2.4(a).
(c) Any portion of an Option with respect to which a timely Retention
Election has been delivered to the Company (the "Elected Portion") shall, at the
Effective Time, become and represent an option to purchase Cendant Common Stock;
and Parent shall assume each such option (hereinafter, an "Assumed Option")
subject to the terms of the applicable Assumed Option Plan, in each case as
heretofore amended or restated, as the case may be, and the agreement evidencing
the grant thereunder of such Assumed Option; provided, however, that from and
after the Effective Time, (i) the number of shares of Cendant Common Stock
purchasable upon exercise of such Assumed Option shall be equal to the number of
shares of Company Common Stock that were purchasable under such Assumed Option
immediately prior to the Effective Time multiplied by the Exchange Ratio (as
defined below), and rounded up or down to the nearest whole share, and (ii) the
per share exercise price under each such Assumed Option shall be adjusted by
dividing the per share exercise price of each such Assumed Option by the
Exchange Ratio, and rounding up or down to the nearest whole cent; provided,
however, that in the case of any Options intended to qualify as "incentive stock
options" under Section 422 of the Code, the adjustments pursuant to this Section
2.4(c) shall be determined in order to comply with Section 424(a) of the Code.
The terms of the Assumed Option shall be the same as the original Option except
that all references to the Company shall be deemed to be references to Parent.
The terms of each Assumed Option shall, to the extent provided in the applicable
Assumed Option Plan, be subject to further adjustment as appropriate to reflect
any stock split, stock dividend, recapitalization or other similar transaction
with respect to Cendant Common Stock on or subsequent to the Effective Time. The
"Exchange Ratio" shall be equal to the ratio obtained by dividing the amount of
the Merger Consideration by the average closing price of one share of Cendant
Common Stock on the New York Stock Exchange for the ten (10) consecutive trading
days immediately preceding the Effective Date.
(d) The parties acknowledge that each Option to purchase shares of
Company Common Stock under the Assumed Option Plans shall become fully vested
and exercisable in connection with consummation of the Merger in accordance with
and subject to the terms of such Option and the relevant Assumed Option Plan.
2.5 Adjustments. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding Shares shall
occur in accordance with the terms of this Agreement, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of Shares, or stock dividend thereon with a record date during such
period, the cash payable pursuant to the Offer, the Merger Consideration and any
other amounts payable pursuant to this Agreement shall be appropriately
adjusted.
2.6 Stockholders Meeting.
(a) The Company, acting through the Board, shall, in accordance with
and to the extent permitted by applicable law:
(i) as promptly as practicable after the date hereof, call, give
notice of, convene and hold a special meeting of its stockholders (the
"Stockholders Meeting") for the purpose of considering and taking action upon
the adoption of this Agreement;
(ii) prepare and file with the Securities and Exchange Commission
(the "SEC") a preliminary proxy statement relating to this Agreement and the
Merger as promptly as practicable after the date hereof, and use its
commercially reasonable efforts to obtain and furnish the information required
to be included in such proxy statement and, after consultation with Parent,
respond promptly to any comments made by the SEC and its staff with respect to
the preliminary proxy statement and cause a definitive proxy statement relating
to this Agreement and the Merger (such proxy statement, together with any and
all amendments or supplements thereto, the "Proxy Statement") to be mailed to
its stockholders at the earliest practicable time;
(iii) include in the Proxy Statement the recommendations of the
Independent Committee and the Board that stockholders of the Company vote in
favor of the adoption of this Agreement (as the same may be amended, modified or
withdrawn in accordance with Section 5.2(d) hereof); and
(iv) use its reasonable best efforts to solicit from holders of
Shares proxies in favor of the adoption of this Agreement and take all other
action necessary or advisable to secure, at the Stockholders Meeting, the
affirmative vote of (A) the holders of a majority of the outstanding shares of
Company Common Stock (voting as one class, with each share of Company Common
Stock having one vote) and (B) the holders of a majority of the votes cast at
the Stockholders Meeting by holders of Shares in favor of the adoption of this
Agreement (the "Company Stockholder Approval"). The Company shall cause all
Shares for which valid proxies have been submitted and not revoked to be voted
at the Stockholders Meeting in accordance with the instructions on such proxies.
(b) Once the Stockholders Meeting has been called and noticed, the
Company shall not postpone or adjourn the Stockholders Meeting (other than for
the absence of a quorum) without the prior written consent of Parent.
(c) Parent, PHH and Purchaser agree to promptly provide the Company
with the information concerning Parent, PHH and Purchaser and their respective
Affiliates required to be included in the Proxy Statement. At the Stockholders
Meeting, Parent, PHH and Purchaser shall vote, or cause to be voted, all shares
of Company Common Stock beneficially owned by them or any of their respective
Subsidiaries in favor of the adoption of this Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in the event that the Independent Committee changes its
recommendation of this Agreement and the Merger in accordance with Section
5.2(d) hereof and this Agreement has not been terminated pursuant to Article VII
hereof, then, without limiting the Company's ability to disclose the
recommendations of the Board and the Independent Committee in the Proxy
Statement:
(i) in performing its obligations under this Section 2.6, the
Company shall not be obligated to solicit from holders of Shares proxies in
favor of the adoption of this Agreement or to take all action necessary or
advisable to secure, at the Stockholders Meeting, the Company Stockholders
Approval, but instead shall be obligated to solicit impartially from holders of
Shares proxies to be voted at the Stockholders Meeting (making no instructions
to vote in favor or against, but merely to return a completed proxy card) and to
take all action necessary or advisable to maximize, at the Stockholders Meeting,
the number of proxies submitted by holders of Shares;
(ii) the Company shall remain obligated to vote all unspecified
but executed proxies submitted by holders of Shares in favor of the adoption of
this Agreement;
(iii) Parent and its affiliates and agents shall have the right, as a
participant in the Company's solicitation of proxies, to communicate with and
solicit from holders of Shares the submission of Company proxies in favor of the
adoption of this Agreement and to take all actions necessary or advisable to
secure, at the Stockholders Meeting, the Company Stockholders Approval and
otherwise to act as a participant in the Company's solicitation; and
(iv) The Company shall cooperate with Parent in connection with
any actions taken by it pursuant to clause (d)(ii) above and shall make any
filings under Federal securities laws required in connection therewith.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, PHH and Merger
Sub as of the date of this Agreement as follows:
3.1 Organization. The Company and each of its Subsidiaries
is a corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate or other power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted. The Company and each of its Subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary where the failure to be so
duly qualified or licensed or in good standing would, individually or in the
aggregate, result in a Material Adverse Effect (as defined below). As used
herein, the term "Material Adverse Effect" means a material adverse change in,
or effect on, the business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole, but shall not
include any change, event, effect, occurrence or circumstance arising in
connection with or as a result of (i) the announcement or performance of the
Transactions contemplated by this Agreement, in and of themselves, or (ii)
Parent's announcement or other communication of Parent of the plans or
intentions of Parent with respect to any conduct of any business of the Company
or any of its Subsidiaries.
3.2 Authority Relative to this Agreement.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the Transactions,
including, without limitation, the Merger. The execution and delivery of this
Agreement by the Company, and the consummation of the Transactions to be
consummated by it, have been duly authorized by the Board and no other corporate
proceedings on the part of the Company are required to authorize this Agreement
or to consummate the Transactions to be consummated by it, other than, with
respect to the Merger, (i) the Company Stockholder Approval and (ii) the filing
and recordation of the Certificate of Merger in accordance with the DGCL. This
Agreement has been duly executed and delivered by the Company and (assuming due
authorization, execution and delivery hereof by Parent, PHH and Merger Sub)
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, relating to creditors' rights
generally and (ii) equitable remedies of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(b) The Company hereby represents and warrants that (i) the
Independent Committee has been duly authorized and constituted; (ii) the Board,
based on the recommendation of the Independent Committee at a meeting duly
called and held, has (A) determined that (x) the Merger Consideration is fair to
the holders of Shares and (y) the Merger is advisable and in the best interests
of the Company and the holders of Shares, (B) approved and declared the
advisability of, this Agreement and (C) determined to recommend that the
stockholders of the Company vote to adopt this Agreement in accordance with the
provisions of the DGCL. The Independent Committee and the Board have received
the written opinion (the "Fairness Opinion") of Morgan Stanley to the effect
that, as of the date hereof, the Merger Consideration to be paid to the holders
of Shares is fair to such holders from a financial point of view, and, as of the
date hereof, such Fairness Opinion has not been withdrawn. The Company has
delivered a true, correct and complete copy of the Fairness Opinion to Parent.
3.3 Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Company Common Stock is the only vote of holders of
any class or series of the Company's capital stock required to approve the
Merger and adopt this Agreement under the DGCL, the Company's Amended and
Restated Certificate of Incorporation and the Company's Amended and Restated
By-Laws.
3.4 State Takeover Statutes. The Company has elected not to be
governed by Section 203 of the DGCL in accordance with the provisions of Section
203(b) of the DGCL. The restrictions on business combinations contained in
Section 203 of the DGCL do not apply to the Merger or the other Transactions nor
shall they apply to any member of the Acquisition Group as a result of this
Agreement or the Transactions.
3.5 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock, 15,000,000 shares of class B common
stock, par value $.01 per share of the Company (the "Class B Common Stock") and
20,000,000 shares of preferred stock, par value $.01 per share, of the Company
("Preferred Stock"). As of October 31, 2000, there were (i) 31,156,172 shares of
Company Common Stock issued and outstanding, (ii) 4,768,828 shares of Company
Common Stock held in the Company's treasury, (iii) 9,000,000 shares of Company
Common Stock reserved for issuance upon the exercise of outstanding Options,
(iv) no shares of Company Common Stock reserved for issuance upon the conversion
of the Class B Common Stock, (v) no shares of Class B Common Stock issued, (vi)
no shares of Class B Common Stock reserved for issuance upon conversion of the
series A preferred stock, par value $.01 per share, of Avis Fleet Leasing and
Management Corporation, a Texas corporation and a subsidiary of the Company (the
"Avis Fleet") and series B preferred stock, par value $.01 per share of Avis
Fleet, and (vii) no shares of Preferred Stock issued. All issued and outstanding
shares of Company Common Stock are, and all shares of Company Common Stock
issuable upon exercise of Options or conversion of the Class B Common Stock
shall be, when issued in accordance with the respective terms thereof, duly
authorized and validly issued, fully paid and nonassessable, and free of
preemptive rights.
(b) Except as set forth in subsection (a) above or in Section 3.5(b)
of the disclosure letter delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure Letter"), the Company does
not have any shares of its capital stock issued or outstanding and there are no
outstanding subscriptions, options, warrants, calls, convertible securities,
rights or other agreements or commitments (i) to which the Company or any of its
Subsidiaries is a party of any character relating to the issued or unissued
capital stock or other equity interests of the Company or any of its
Subsidiaries, or (ii) obligating the Company or any Subsidiary of the Company to
(A) issue, transfer or sell any shares of capital stock or other equity
interests of the Company or any Subsidiary of the Company or securities
convertible into or exchangeable for such shares or equity interests, (B) grant,
extend or enter into any such subscription, option, warrant, call, convertible
securities or other right, agreement, arrangement or commitment to repurchase,
(C) redeem or otherwise acquire any such shares of capital stock or other equity
interests or (D) provide a material amount of funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
Person.
(c) Neither the Company nor any of its Subsidiaries has outstanding
bonds, debentures, notes or other obligations, the holders of which have the
right to vote (or which are convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company or such
Subsidiary on any matter. Except as set forth in Section 3.5(c) of the Company
Disclosure Letter, there are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock or other equity interest of the
Company or any of its Subsidiaries.
3.6 Subsidiaries.
(a) Section 3.6(a) of the Company Disclosure Letter sets forth a
complete and accurate list of each Subsidiary of the Company. Except as set
forth in Section 3.6 of the Company Disclosure Letter, all outstanding equity
securities or other equity interests in each Subsidiary of the Company (i) are
owned of record and beneficially by the Company or another of the Company's
wholly owned Subsidiaries, free of all liens, claims, charges or encumbrances,
and (ii) have been duly authorized, and are validly issued, fully paid and
nonassessable, and free of preemptive rights. Section 3.6(a) of the Company
Disclosure Letter sets forth all debt securities in excess of $500,000 issued by
the Company or any Subsidiary of the Company.
(b) Except as set forth in Section 3.6(b) of the Company Disclosure
Letter, neither the Company nor any Subsidiary of the Company owns, directly or
indirectly, a material amount of any capital stock, interest or equity
investment or debt security in any corporation, partnership, limited liability
company, joint venture, business, trust or other entity other than interests in
another Subsidiary of the Company.
3.7 No Conflict; Required Filings and Consents.
(a) Except for (i) applicable requirements of (A) the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (B) the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any similar
foreign competition laws applicable hereto, and (C) any state securities or blue
sky laws applicable hereto, (ii) the filing and recordation of the Certificate
of Merger, as required by the DGCL, and (iii) as set forth in Section 3.7(a) of
the Company Disclosure Letter, neither the execution and delivery of this
Agreement by the Company nor the consummation by the Company of the Transactions
contemplated hereby shall require on the part of the Company or any Subsidiary
of the Company any filing with, or obtaining of, any permit, authorization,
consent or approval of, or any notice to, any court, tribunal, legislative,
executive or regulatory authority or agency (a "Governmental Entity"), where the
failure to so file or obtain would, individually or in the aggregate, result in
a Material Adverse Effect or would materially impair the Company's ability to
consummate the Transactions.
(b) Except as set forth in Section 3.7(b) of the Company Disclosure
Letter, neither the execution and delivery of this Agreement by the Company nor
the consummation by the Company of the Transactions will (i) conflict with or
result in any breach of any provision of the Amended and Restated Certificate of
Incorporation of the Company or the Amended and Restated By-laws of the Company
or equivalent organizational documents of any Subsidiary of the Company, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, or give rise to any right of
termination, cancellation, suspension, modification or acceleration of any
obligation under, or result in the creation of a lien under, any of the terms,
conditions or provisions of, or otherwise require the consent or waiver of, or
notice to, any other party under, any bond, note, mortgage, indenture, other
evidence of indebtedness, guarantee, license, agreement or other contract or
instrument ("Contract") to which the Company or any Subsidiary of the Company is
a party or by which any of them or any of their respective properties or assets
is bound, (iii) violate any law, statute, rule, regulation, order, writ,
injunction or decree applicable to the Company, any Subsidiary of the Company or
any of their respective properties or assets, or (iv) require the Company to pay
any existing indebtedness where such violations, breaches, defaults or rights,
in the case of clause (ii) or (iii), would, individually or in the aggregate,
result in a Material Adverse Effect or would materially impair the Company's
ability to consummate the Transactions.
3.8 SEC Documents and Financial Statements.
(a) The Company has filed all forms, reports and documents required to
be filed with the SEC pursuant to the Exchange Act since December 31, 1998
(collectively, the "Company SEC Reports"). The Company SEC Reports, as of their
respective filing dates, (i) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) complied in all material respects
with the then applicable requirements of the Exchange Act, the Securities Act of
1933, as amended (the "Securities Act") and the applicable rules and regulations
thereunder. No Subsidiary of the Company is required to file any forms, reports
or other documents with the SEC.
(b) The consolidated financial statements (including all related
notes) included in the Company SEC Reports fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
respective dates thereof, and the results of operations and the changes in cash
flows of the Company and its consolidated Subsidiaries for the respective
periods set forth therein. Each of the consolidated financial statements
(including all related notes) included in the Company SEC Reports has been
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), except as otherwise noted therein, and subject,
in the case of interim financial statements, to normal and recurring year-end
audit adjustments.
3.9 No Undisclosed Liabilities. Except as and to the extent disclosed
in Section 3.9 of the Company Disclosure Letter or reflected or reserved against
in the Company's consolidated balance sheets included in the Company SEC
Reports, and except for liabilities and obligations incurred in the ordinary
course of business, consistent with past practice since December 31, 1999,
neither the Company nor any Subsidiary of the Company has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by GAAP to be reflected on a consolidated balance sheet of the
Company and its Subsidiaries (or in the notes thereto).
3.10 Absence of Certain Changes. Except as contemplated by this
Agreement or set forth in Section 3.10 of the Company Disclosure Letter or in
the Form 10-Q of the Company filed with respect to the quarter ended June 30,
2000, since June 30, 2000, (a) the businesses of the Company and its
Subsidiaries have been conducted in the ordinary course of business, consistent
with past practice, (b) neither the Company nor any Subsidiary of the Company
has taken any action which, if taken after the date hereof, would violate
Section 5.1 hereof if taken without the approval of Parent, and (c) there has
not occurred any event, circumstance or condition which, individually or
together with all such events, circumstances or conditions, has resulted or
would result in a Material Adverse Effect.
3.11 Proxy Statement. None of the information supplied by the Company
for inclusion or incorporation by reference in the Proxy Statement shall, at the
time it is filed with the SEC, at the time it is first mailed to the Company's
stockholders, or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Company as to any information supplied
by Parent, PHH or Merger Sub to the Company for inclusion or incorporation by
reference in the Proxy Statement. The Proxy Statement shall comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder.
3.12 Litigation. Except as specifically disclosed in the Company SEC
Reports or set forth in Section 3.12 of the Company Disclosure Letter, there is
no action, suit, proceeding, inquiry or investigation pending or, to the
knowledge of the Company, threatened against or involving the Company or any of
its Subsidiaries, at law or in equity, by or before any Governmental Entity
which (i), as of the date hereof, questions or challenges the validity of this
Agreement or which (ii), if adversely determined, would result in a Material
Adverse Effect or would materially impair or delay the ability of the Company to
consummate the Transactions to be consummated by it.
3.13 Taxes. Except as set forth in Section 3.13 of the Company
Disclosure Letter:
(a) Each of the Company and its Subsidiaries has (i) duly and timely
filed (or there has been filed on their behalf) with the appropriate
Governmental Entities all material Tax Returns (as defined below) required to be
filed by it and all such material Tax Returns are true, correct and complete;
(ii) duly paid in full (or there has been duly paid on its behalf) all Taxes (as
defined below) shown on such Tax Returns that are due and payable; and (iii)
made adequate provision, in accordance with GAAP (or adequate provision has been
made on its behalf), for the payment of all current Taxes not yet due.
(b) Each of the Company and its Subsidiaries has complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes and has, within the time and the manner
prescribed by law, withheld and paid over the proper Governmental Entities all
material amounts required to be so withheld and paid over.
(c) Neither the Company nor any of its Subsidiaries has requested an
extension of time within which to file any material Tax Return in respect of a
taxable year which has not since been filed and no outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to material Taxes or material Tax Returns has been given by or on behalf
of the Company or any of its Subsidiaries.
(d) No material federal, state, local or foreign audits, examinations
or other administrative court proceedings have been commenced or, to the
Company's knowledge, are threatened with regard to any material Taxes or
material Tax Returns of the Company or any of its Subsidiaries. No written
notification has been received by the Company or any of its Subsidiaries that
such an audit, examination or other proceeding is pending or threatened with
respect to any material Taxes due from or with respect to or attributable to the
Company or any of its Subsidiaries or any material Tax Return filed by or with
respect to the Company or any of its Subsidiaries.
(e) Neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in the
aggregate, in a payment of (i) any "excess parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), or (ii) any amount that would not be deductible under Section 162(m) of
the Code.
(f) Neither the Company nor any of its Subsidiaries is a party to any
material tax sharing, tax indemnity or other agreement or arrangement.
(g) There are no material liens for Taxes upon the assets of the
Company or any of its Subsidiaries except liens for Taxes not yet due and
payable.
(h) For purposes of this Agreement, "Taxes" shall mean any and all
taxes, charges, fees, levies or other assessments, including income, gross
receipts, excise, real or personal property, sales, withholding, social
security, occupation, use, service, service use, value added, license, net
worth, payroll, franchise, transfer and recording taxes, fees and charges,
imposed by the United States Internal Revenue Service (the "IRS") or any taxing
authority (whether domestic or foreign including any state, local or foreign
government or any subdivision or taxing agency thereof (including a United
States possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest, penalties
or additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. For purposes of this
Agreement, "Tax Return" shall mean any report, return, document, declaration or
other information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes.
3.14 Employee Benefit Plans.
(a) Each material employee benefit plan, program, arrangement or
agreement, including each "employee benefit plan," within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), in each case, maintained by the Company or any of its Subsidiaries,
or to which the Company or any of its Subsidiaries contributes or is required to
contribute (each, a "Plan"; collectively, "Plans") is listed in Section 3.14(a)
of the Company Disclosure Letter. None of the Company or any of its Subsidiaries
has any commitment or formal plan to create any additional employee benefit plan
or modify or change any existing Plan (except as required to maintain the
tax-qualified status of any Plan intended to qualify under Section 401(a) of the
Code).
(b) Except as disclosed in the Company SEC Reports or Section 3.14(b)
of the Company Disclosure Letter or to the extent that any breach of the
representations set forth in this sentence would not have a Material Adverse
Effect: (i) each Plan (other than any Plan that is a "multiemployer plan,"
within the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan")) is
in compliance with applicable law and has been administered and operated in all
respects in accordance with its terms; (ii) each Plan (other than any
Multiemployer Plan) which is intended to be "qualified" within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
has received a favorable determination letter regarding its tax-qualified status
from the IRS and the Company is not aware of any circumstances that could
reasonably be expected to result in the revocation of such letter; (iii) the
actuarial present value of the accumulated plan benefits (whether or not vested)
under each Plan covered by Title IV of ERISA (other than any Multiemployer Plan)
as of the close of its most recent plan year did not exceed the fair value of
the assets allocable thereto; (iv) no Plan covered by Title IV of ERISA (other
than any Multiemployer Plan) has been terminated and no proceedings have been
instituted to terminate or appoint a trustee to administer any such plan; (v) no
"reportable event" (as defined in Section 4043 of ERISA) has occurred with
respect to any Plan covered by Title IV of ERISA (other than any Multiemployer
Plan); (vi) no Plan (other than any Multiemployer Plan) subject to Section 412
of the Code or Section 302 of ERISA nor any such employee benefit plan sponsored
or maintained by any entity that, together with the Company, would be deemed a
"single employer" within the meaning of Section 4001(b) of ERISA (an "ERISA
Affiliate") has incurred any accumulated funding deficiency within the meaning
of Section 412 of the Code or Section 302 of ERISA, or obtained a waiver of any
minimum funding standard or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA; (vii) the Company and
each Subsidiary of the Company have made all contributions to each Plan required
by the terms of each such Plan or any collectively bargained agreement; (viii)
neither the Company nor any Subsidiary of the Company has incurred any
unsatisfied withdrawal liability under Part 1 of Subtitle E of Title IV of ERISA
to any Multiemployer Plan; (ix) no Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any of its Subsidiaries for
periods extending beyond their retirement or other termination of service, other
than (1) coverage mandated by applicable law, (2) death benefits under any
"pension plan," or (3) benefits the full cost of which is borne by the current
or former employee (or his or her beneficiary); (x) neither the Company nor any
of its Subsidiaries nor, to the knowledge of the Company, any other
"disqualified person" or "party in interest" (as defined in Section 4975(e)(2)
of the Code and Section 3(14) of ERISA, respectively) has engaged in any
transactions in connection with any Plan that would result in the imposition of
a penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section 4975
of the Code; (xi) there has been no failure of a Plan that is a group health
plan (as defined in Section 5000(b)(1) of the Code) to meet the requirements of
Section 4980B(f) of the Code with respect to a qualified beneficiary (as defined
in Section 4980B(g) of the Code); (xii) there are not pending or, to the
Company's knowledge, threatened, claims by or on behalf of any Plan, by any
employee or beneficiary covered under any such Plan or otherwise involving any
such Plan (other than routine claims for benefits payable in the ordinary
course, and appeals of denied claims); and (xiii) no liability under Title IV or
Section 302 of ERISA has been incurred by the Company or any ERISA Affiliate
that has not been satisfied in full, and no condition exists that could
reasonably be expected to present a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation (which premiums have been paid when
due).
(c) The Company has heretofore delivered or made available to Parent
true and complete copies of each Plan and any amendments thereto, any related
trust or other funding vehicle, any summaries required under ERISA or the Code,
the most recent annual reports filed with the IRS, and the most recent
determination letter received from the IRS with respect to each Plan intended to
qualify under Section 401(a) of the Code.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Letter, the consummation of the Transactions shall not, either alone or in
combination with another event, (i) entitle any current or former employee or
officer of the Company or any of its Subsidiaries to severance pay, unemployment
compensation or any other payment or benefit, except as expressly provided in
this Agreement, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
3.15 Compliance with Applicable Laws. Except as set forth in Section
3.15 of the Company Disclosure Letter, each of the Company and its Subsidiaries,
and their respective properties, assets and operations, are in compliance in all
material respects with all applicable statutes, laws, rules, regulations,
judgments, decrees, orders, arbitration awards, franchises, permits or licenses
or other governmental authorizations or approvals which are material to the
business and operations of the Company or its Subsidiaries. Except as set forth
in Section 3.15 of the Company Disclosure Letter, the Company and its
Subsidiaries hold all licenses, franchises, ordinances, authorizations, permits,
certificates, variances, exemptions, concessions, leases, rights of way,
easements, instruments, orders and approvals, domestic or foreign ("Permits"),
required for the ownership of the assets and operation of the businesses of the
Company and its Subsidiaries where the failure of which to hold would,
individually or in the aggregate, result in a Material Adverse Effect. Except as
set forth in Section 3.15 of the Company Disclosure Letter, all Permits of the
Company and its Subsidiaries required under any statute, law, rule or regulation
of any Governmental Entity are in full force and effect where the failure to be
in full force and effect would have a Material Adverse Effect.
3.16 Material Contracts.
(a) Except as set forth in Section 3.16(a) of the Company Disclosure
Letter, neither the Company nor any Subsidiary of the Company is a party to, or
bound by, any Contract which is material to the Company and its Subsidiaries,
taken as a whole (a "Company Material Contract"). Notwithstanding the foregoing,
each of the following Contracts shall be a Company Material Contract and shall
be set forth in Section 3.16 of the Disclosure Schedule:
(i) any contracts or agreements under which the Company or any
Subsidiary of the Company has any outstanding indebtedness, obligation or
liability for borrowed money or the deferred purchase price of property or has
the right or obligation to incur any such indebtedness, obligation or liability
in excess of $500,000;
(ii) any bonds or agreements of guarantee or indemnification in
which the Company or any Subsidiary of the Company acts as surety, guarantor or
indemnitor with respect to any obligation (fixed or contingent) in excess of
$500,000, other than any such guarantees of the obligations of the Company or
any Subsidiary of the Company;
(iii) any noncompete agreements to which the Company, any
Subsidiary of the Company or any Affiliate thereof is a party;
(iv) any partnership and joint venture agreements; and
(v) any Contract that provides for the payment of any amount or
entitles any Person to receive any other benefit or exercise any other right as
a result of the execution, delivery or performance of this Agreement, or the
consummation of the Transactions, including the Merger.
(b) Neither the Company nor any Subsidiary of the Company is in breach
of or default under the terms of any Company Material Contract where such breach
or default would have a Material Adverse Effect. To the knowledge of the
Company, no other party to any Company Material Contract is in breach of or
default under the terms of any Company Material Contract where such breach or
default would have a Material Adverse Effect. Each Company Material Contract is
a valid and binding obligation of the Company or the Subsidiary of the Company
which is party thereto and, to the knowledge of the Company, of each other party
thereto, and is in full force and effect, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, relating to creditors' rights
generally and (ii) equitable remedies of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
3.17 Environmental Laws.
(a) Except as set forth in Section 3.17(a) of the Company Disclosure
Letter, each of the Company and its Subsidiaries is (i) in compliance in all
material respects with all applicable Environmental Laws (as defined below),
which compliance includes the possession by the Company and its Subsidiaries of
all Permits and other governmental authorizations required under applicable
Environmental Laws, and (ii) in compliance with the terms and conditions of such
Permits where the failure to be in compliance would result in a liability or
obligation of the Company or any of its Subsidiaries of any nature, whether or
not accrued, contingent or otherwise, in an amount exceeding $500,000
individually, and $5,000,000 in the aggregate. Except as set forth in Section
3.17(a) of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has received any communication or written notice, whether from a
Governmental Entity, citizens group, employee or otherwise, that alleges that
the Company or any of its Subsidiaries is not in compliance with applicable
Environmental Laws, where the failure to be in compliance would result in a
liability or obligation of the Company or any of its Subsidiaries of any nature,
whether or not accrued, contingent or otherwise, in an amount exceeding $500,000
individually, and $5,000,000 in the aggregate and, to the best knowledge of the
Company and its Subsidiaries after due inquiry, there are no circumstances that
may prevent or interfere with such compliance in the future, where the failure
to be in compliance would result in a liability or obligation of the Company or
any of its Subsidiaries of any nature, whether or not accrued, contingent or
otherwise, in an amount exceeding $500,000 individually, and $5,000,000 in the
aggregate.
(b) Except as set forth in Section 3.17(b) of the Company Disclosure
Letter, there is no Environmental Claim (as defined below) which, if adversely
determined, would result in a liability or obligation of the Company or any of
its Subsidiaries, whether or not accrued, contingent or otherwise, in an amount
exceeding $500,000 individually, and $5,000,000 in the aggregate, pending or
threatened against the Company or any of its Subsidiaries or, to the best
knowledge of the Company and its Subsidiaries after due inquiry, against any
person or entity whose liability for any Environmental Claim the Company or any
of its Subsidiaries has or may have retained or assumed either contractually or
by operation of law which, if adversely determined, would result in a liability
or obligation of the Company or any of its Subsidiaries, whether or not accrued,
contingent or otherwise, in an amount exceeding $500,000 individually, and
$5,000,000 in the aggregate.
(c) Except as set forth in Section 3.17(c) of the Company Disclosure
Letter, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including the Release (as defined below) of any
Hazardous Materials (as defined below), that could form the basis of any
material Environmental Claim (as defined below) against the Company or any of
its Subsidiaries or, to the best knowledge of the Company and its Subsidiaries
after due inquiry, against any Person or entity whose liability for any material
Environmental Claim the Company or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law.
(d) Without in any way limiting the generality of the foregoing,
except as set forth in Section 3.17(d) of the Company Disclosure Letter, all
underground storage tanks owned, operated, or leased by the Company or any of
its Subsidiaries and which are subject to regulation under the federal Resource
Conservation and Recovery Act (or equivalent state or local law regulating
underground storage tanks) meet the technical standards prescribed at Title 40
Code of Federal Regulations Part 280 which became effective December 22, 1998
(or any applicable state or local law requirements which are more stringent than
such technical standards or which became effective before such date) where the
failure to meet such standards or requirements would result in a liability or
obligation of the Company or any Subsidiary, whether or not accrued, contingent
or otherwise, in an amount exceeding $500,000 individually, and $5,000,000 in
the aggregate.
(e) The Company has provided to Parent true and correct copies of all
material assessments, reports and investigations or audits in the possession of
the Company or its Subsidiaries regarding environmental matters pertaining to,
or the environmental condition of, any property currently or formerly owned,
operated or leased by the Company or its Subsidiaries, or the compliance (or
noncompliance) by the Company or any of its Subsidiaries with any Environmental
Laws.
(f) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any person or entity
alleging potential liability (including potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or Release into the environment, of any
Hazardous Materials at any location, whether or not owned or operated by the
Company or any of its Subsidiaries or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all federal, interstate, state,
local and foreign laws and regulations relating to pollution or protection of
human health, safety, or the environment (including ambient air, surface water,
ground water, land surface or subsurface strata), including laws and regulations
relating to emissions, discharges, releases or threatened releases of Hazardous
Materials, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials.
(iii)...."Hazardous Materials" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, radioactive
materials, asbestos, petroleum and petroleum products.
(iv) "Release" shall mean releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, escaping, leaching, disposing or
dumping.
3.18 Intellectual Property. Except for the rights (the "Licensed
Rights") licensed to the Company pursuant to the Master License Agreement, dated
as of July 30, 1997, among Cendant Car Rental, Inc., Avis Rent A Car System,
Inc. and Wizard Co., Inc. (the "Avis License"), either the Company or a
Subsidiary of the Company owns, or is licensed or otherwise possesses legally
enforceable rights to use, all Intellectual Property (as defined below) used in
their respective businesses where the failure to own, license or otherwise
possess such Intellectual Property would result in a Material Adverse Effect and
the consummation of the Transactions shall not alter or impair such rights in
any material respect. Except as set forth in Section 3.18 of the Company
Disclosure Letter, there are no pending or, to the knowledge of the Company,
threatened claims by any Person challenging the use by the Company or its
Subsidiaries of any material trademarks, trade names, service marks, service
names, mark registrations, logos, assumed names, registered and unregistered
copyrights, patents or applications and registrations therefor (collectively,
the "Intellectual Property") in their respective operations as currently
conducted which, if adversely determined, would result in a Material Adverse
Effect. The conduct of the businesses of the Company and its Subsidiaries (other
than the use by the Company and its Subsidiaries of the Licensed Rights in
accordance with the terms of the Avis License) does not infringe, in any
material respect, upon any intellectual property rights or any other proprietary
right of any Person, and neither the Company nor any Subsidiary has received any
written notice from any other Person pertaining to or challenging the right of
the Company or any Subsidiary to use any of the Intellectual Property. Except as
set forth in Section 3.18 of the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries has made any claim of a violation or infringement by
others of its rights to or in connection with the Intellectual Property used in
their respective businesses which violation or infringement would have a
Material Adverse Effect.
3.19 Labor Matters.
(a) Except as set forth in Section 3.19(a) of the Company Disclosure
Letter or specifically disclosed in the Company SEC Reports, there are no labor
or collective bargaining agreements to which the Company or any Subsidiary of
the Company is a party. To the knowledge of the Company, there is no union
organizing effort pending or threatened against the Company or any Subsidiary of
the Company. Except as set forth in Section 3.19(a) of the Company Disclosure
Letter, there is no labor strike, labor dispute, work slowdown, stoppage or
lockout pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary of the Company, which has had or would
result in a Material Adverse Effect. Except as set froth in Section 3.19(a) of
the Company Disclosure Letter, there is no unfair labor practice or labor
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary of the Company, that has had or would
result in a Material Adverse Effect. The Company and its Subsidiaries are in
compliance in all material respects with all applicable laws respecting (i)
employment and employment practices, (ii) terms and conditions of employment and
wages and hours, and (iii) unfair labor practice. Except as set forth in Section
3.19(a) of the Company Disclosure Letter or specifically disclosed in the
Company SEC Reports, there is no action, suit, proceeding, inquiry or
investigation pending or, to the knowledge of the Company, threatened against or
involving the Company or any of its Subsidiaries, at law or in equity, alleging
a violation of applicable laws, rules or regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours, or
unfair labor practice that has had or would result in a Material Adverse Effect.
(b) Except as set forth in Section 3.19(b) of the Company Disclosure
Letter, no grievance or any arbitration proceeding arising out of or under
collective bargaining agreements which would have a Material Adverse Effect is
pending and no claim therefor exists.
(c) Neither the Company nor any of its Subsidiaries has any
liabilities under the Worker Adjustment and Retraining Notification Act (the
"WARN Act") that has had or would result in a Material Adverse Effect.
3.20 Brokers or Finders. None of the Company or any of its
Subsidiaries or Affiliates has entered into any agreement or arrangement
entitling any agent, broker, investment banker, financial advisor or other firm
or Person to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the Transactions, except Morgan Stanley and Bear,
Stearns & Co. Inc. ("Bear Stearns"), whose fees and expenses shall be paid by
the Company in accordance with the Company's agreement with such firm. True and
correct copies of engagement letters between the Company and each of Morgan
Stanley and Bear Stearns have been provided to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT, PHH AND MERGER SUB
Each of Parent, PHH and Merger Sub jointly and severally
represents and warrants to the Company as follows:
4.1 Organization. Each of Parent, PHH and Merger Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. Merger Sub has not engaged in any activities other
than in connection with or as contemplated by this Agreement and has no material
liabilities other than those incident to its formation and the Transactions.
4.2 Authority Relative to this Agreement. Each of Parent, PHH and
Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution and
delivery of this Agreement by Parent, PHH and Merger Sub, and the consummation
of the Transactions, have been duly authorized by the respective board of
directors of each of Parent, PHH and Merger Sub, and by PHH as the sole
stockholder of Merger Sub, and no other corporate proceeding on the part of
Parent, PHH or Merger Sub is required to authorize this Agreement or to
consummate the Transactions, other than the filing and the recordation of the
Certificate of Merger in accordance with the DGCL. This Agreement has been duly
executed and delivered by each of Parent, PHH and Merger Sub and (assuming due
and valid authorization, execution and delivery hereof by the Company)
constitutes a valid and binding agreement of each of Parent, PHH and Merger Sub,
enforceable against each of Parent, PHH and Merger Sub in accordance with its
terms, except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, relating to creditor's rights generally and (ii) equitable remedies
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
4.3 No Conflict; Required Filings and Consents.
(a) Except (i) for applicable requirements of (A) the Exchange Act,
(B) the HSR Act and any similar foreign competition laws, and (C) any state
securities and blue sky filings applicable hereto, (ii) for the filing and
recordation of the Certificate of Merger, as required by the DGCL, and (iii) as
set forth in the disclosure letter delivered by Parent, PHH and Merger Sub prior
to the execution of this Agreement to the Company (the "Parent Disclosure
Letter"), neither the execution and delivery of this Agreement by Parent, PHH
and Merger Sub, nor the consummation by Parent, PHH and Merger Sub of the
Transactions, shall require, on the part of Parent, PHH or Merger Sub, any
filing with, or obtaining of, any permit, authorization, consent or approval of,
any Governmental Entity, except for such filings, permits, authorizations,
consents or approvals the failure of which to make or obtain would not
materially impair the ability of Parent, PHH or Merger Sub to consummate the
Transactions.
(b) Except as set forth in Section 4.3(b) of the Parent Disclosure
Letter, neither the execution and delivery of this Agreement by Parent, PHH or
Merger Sub, nor the consummation by Parent, PHH or Merger Sub of the
Transactions, shall (i) conflict with or result in a breach of the certificate
of incorporation or by-laws of Parent, PHH or Merger Sub, (ii) result in a
violation or breach of or constitute (with or without due notice or lapse of
time, or both) a default under, or give rise to any right of termination,
cancellation, suspension, modification or acceleration under, or result in the
creation of a lien under, any of the terms, conditions or provisions of, or
otherwise require the consent or waiver of, or notice to, any other party under,
any material bond note, mortgage, indenture, other evidence of indebtedness,
guarantee, license, agreement or other contract or instrument to which Parent,
PHH or Merger Sub is a party or by which any of them or any of their respective
properties or assets is bound, or (iii) violate any law, statute, rule,
regulation, order, writ, injunction or decree applicable to Parent, PHH or
Merger Sub, or any of their respective properties or assets except, in the case
of clauses (ii) and (iii), for such violations, breaches, defaults or rights
which would not materially impair the ability of Parent, PHH or Merger Sub to
consummate the Transactions.
4.4 Proxy Statement. None of the information supplied by Parent, PHH
or Merger Sub for inclusion or incorporation by reference in the Proxy Statement
shall, at the time it is filed with the SEC, at the time it is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
4.5 Litigation. Except as set forth in Section 4.5 of the Parent
Disclosure Letter, there is no action, suit, proceeding, inquiry or
investigation pending or, to the knowledge of Parent, PHH or Merger Sub,
threatened involving Parent, PHH or Merger Sub, at law or in equity, by or
before any Governmental Entity which questions or challenges the validity of
this Agreement or which, if adversely determined, would materially impair or
delay the ability of Parent, PHH or Merger Sub to consummate the Transactions.
4.6 Financing. Parent and PHH have or shall have sufficient cash on
hand and shall provide, or cause to be provided, at such time or times as such
funds are required, to Merger Sub or, as the case may be, the Company, such cash
on hand (i) to pay the Merger Consideration and to pay any other amounts
required to be paid in order to consummate the Transactions contemplated by this
Agreement, including pursuant to Section 2.4, (ii) to pay any fees and expenses
in connection with the Transactions and (iii) to satisfy the obligations to pay
any existing indebtedness of the Company or its Subsidiaries that is required to
be repaid as a result of the Transactions.
4.7 Brokers or Finders. None of Parent, PHH, Merger Sub or any of
their respective Affiliates has entered into any agreement or arrangement
entitling any agent, broker, investment banker, financial advisor or other firm
or Person to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the Transactions, except Lehman Brothers and Chase
Securities Inc., whose fees and expenses shall be paid by Parent in accordance
with Parent's agreement with each such firm.
ARTICLE V
COVENANTS
5.1 Conduct of Business by the Company Pending the Merger. The Company
covenants and agrees that, during the period from the date of this Agreement and
continuing until the earlier to occur of the termination of this Agreement or
the Effective Time, except as contemplated by this Agreement or required by
applicable law or rule of the New York Stock Exchange, unless Parent shall
otherwise agree in writing (such agreement not to be unreasonably withheld,
conditioned or delayed), and except as set forth in Section 5.1 of the Company
Disclosure Letter:
(a) the Company shall conduct its business and shall cause the
businesses of its Subsidiaries to be conducted, only in, and the Company and its
Subsidiaries shall not take any action except in, the ordinary course of
business, consistent with past practice; and the Company shall use its
reasonable best efforts to preserve intact the business organizations of the
Company and its Subsidiaries, and to maintain (i) the services of the present
officers, employees and consultants of the Company and its Subsidiaries and (ii)
its existing relations with suppliers, creditors, business associates and others
having business dealings with it; and
(b) without limiting the generality of the foregoing, the Company
shall not, and shall cause its Subsidiaries not to, take any of the following
actions:
(i) amend its certificate of incorporation or by-laws;
(ii) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class or any other equity interest, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other equity interest in the Company or any of its
Subsidiaries (except for the issuance of shares of Company Common Stock pursuant
to the exercise of Options outstanding on the date hereof);
(iii) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock or any other equity interest, including any
constructive or deemed distributions, and any distribution in connection with
the adoption of a shareholders rights plan, or make any other payments to
stockholders in their capacity as such, except that a wholly owned Subsidiary of
the Company may declare and pay a dividend to its parent;
(iv) split, combine or reclassify any of its capital stock or any
other equity interest or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or any other equity interest;
(v) redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock or any other equity interests;
(vi) (A) purchase, acquire, sell, transfer, lease, license,
mortgage, encumber or dispose of any material assets, other than the purchase,
sale, rental and lease of vehicles in the ordinary course of business,
consistent with past practice; (B) acquire (by merger, consolidation or
acquisition of stock or assets or otherwise) any corporation, partnership or
other business organization or division thereof; (C) sell, transfer or dispose
of any Subsidiary of the Company (by merger, consolidation, sale of stock or
assets or otherwise); (D) incur or assume any indebtedness for borrowed money or
other liability, other than in connection with the financing of vehicles in the
ordinary course of business, consistent with past practice; (E) modify, amend or
terminate any confidentiality agreements, standstill agreements or Company
Material Contracts to which the Company or its Subsidiaries is a party or by
which it is bound, or waive, release or assign any material rights or claims,
other than in the ordinary course of business, consistent with past practice;
(F) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person, other than in the ordinary course of business, consistent with past
practice; (G) make any material loans, advances or capital contributions to, or
investments in, any other Person (other than to its wholly owned Subsidiaries in
the ordinary course of business, consistent with past practice); (H) repurchase,
redeem, repay or take any other action with respect to the issued and
outstanding 11% Senior Subordinated Notes of the Company due May 2009 (the
"Notes"), other than pursuant to Section 5.7; or (I) other than in the ordinary
course of business, consistent with past practice, enter into any material
commitment, transaction, contract or agreement, including any of the following
entered into outside the ordinary course of business (i) any material capital
expenditure, (ii) any material contract or agreement outside the ordinary course
of business, (iii) any contracts or agreements that cannot be cancelled on
notice of thirty (30) days or less and (iv) any noncompete agreements or other
agreements that limit the ability of the Company to conduct any line of
business;
(vii) increase the compensation, severance or other benefits
payable or to become payable to its directors, officers or employees, other than
increases in salary or wages of employees of the Company or its Subsidiaries
(who are not directors or executive officers of the Company) in accordance with
past practice or pursuant to binding commitments made prior to the date hereof,
or grant any severance or termination pay (except payments required to be made
under the Plans or other obligations existing on the date hereof in accordance
with the terms of such obligations) to, or enter into any employment or
severance agreement with, any employee of the Company or any of its
Subsidiaries, or establish, adopt, enter into or amend any collective bargaining
agreement, Plan, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees or any of their
beneficiaries, except, in each case, as may be required by law or as would not
result in a material increase in the cost of maintaining such collective
bargaining agreement, Plan, trust, fund, policy or arrangement;
(viii) pay, repurchase, discharge or satisfy any of its material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business, consistent with past practice, or pursuant to
contractual requirements existing on the date hereof, of claims, liabilities or
obligations reflected or reserved against, in, or contemplated by, the
consolidated financial statements (or the notes thereto) of the Company and its
Subsidiaries;
(ix) take any action to change accounting policies or procedures
or any of its methods of reporting income, deductions or other items for income
tax purposes, except as required by a change in GAAP, SEC position or applicable
law occurring after the date hereof;
(x) approve or authorize any action to be submitted to the
stockholders of the Company for approval other than pursuant to this Agreement;
(xi) make or change any material election with respect to Taxes,
agree or settle any material claim or assessment in respect of Taxes, or agree
to an extension or waiver of the limitation period to any material claim or
assessment in respect of Taxes;
(xii) voluntarily take, or commit to take, any action that would
or is reasonably likely to result in any of the conditions to the Merger set
forth in Article VI not being satisfied or make any representation or warranty
of the Company contained herein that is not qualified as to materiality
inaccurate in any material respect, or any representation or warranty that is
qualified as to materiality untrue in any respect at, or as of any time prior
to, the Effective Time, or that would materially impair the ability of the
Company, Parent, PHH or Merger Sub to consummate the Transactions, including the
Merger, in accordance with the terms hereof or materially delay such
consummation; or
(xiii) agree, authorize or announce to take any of the actions
described in subsections (i) through (xii) above.
5.2 No Solicitation.
(a) Except as set forth below, from and after the date hereof and
prior to the Effective Time, the Company shall not, directly or indirectly,
through any Subsidiary or Affiliate of the Company, or through any officer,
director, employee, investment banker, agent or other representative of the
Company or any Subsidiary or Affiliate of the Company, (i) encourage, invite,
initiate or solicit any inquiries relating to or the submission or making of a
proposal by any Person with respect to a Third-Party Acquisition (as defined
below) or (ii) participate in, or encourage, invite, initiate or solicit,
negotiations or discussions with, or furnish or cause to be furnished any
information to, any Person relating to a Third-Party Acquisition. Upon the
execution of this Agreement, the Company shall immediately (i) cease, or cause
to be ceased, any discussions or negotiations with any Person, entity or group
in connection with any proposed or potential Third-Party Acquisition and shall
seek to have returned to the Company any confidential information provided in
any such discussions or negotiations and (ii) take all actions necessary to
rescind the Company's stock repurchase program authorized by the Board on August
9, 2000. Notwithstanding the foregoing, prior to the Stockholders Meeting, if
the Company, the Board or the Independent Committee, without being in violation
of the terms of this Section 5.2, receives an unsolicited bona fide written
proposal from any Person or group with respect to a Third-Party Acquisition
which could reasonably be expected to result in a Superior Proposal (as defined
below), then the Company may, directly or indirectly, furnish information and
access to such Person or group pursuant to an appropriate confidentiality
agreement, and may participate in discussions and negotiations with, such Person
or group; provided, however, that the terms of such confidentiality agreement
shall have terms that are not less restrictive than the terms set forth in the
confidentiality agreement between the Company and Parent, dated as of July 31,
2000 (the "Confidentiality Agreement").
(b) The Company shall within twenty-four (24) hours notify Parent in
writing upon receipt of any proposal, written or oral, relating to a Third-Party
Acquisition or any request for nonpublic information relating to the Company or
any of its Subsidiaries in connection with any pending, proposed or contemplated
Third-Party Acquisition or for access to the properties, books or records of the
Company or any Subsidiary by any Person that informs the Board or the
Independent Committee that it is considering making, or has made, a proposal
relating to a Third-Party Acquisition. Such notice shall identify the Person
submitting the proposal, attach a copy of any written correspondence or other
written materials relating to such proposal, summarize any significant terms of
such proposal not reflected in any such attached materials, state whether the
Company is providing or intends to provide the Person or group making such
proposal with access to information concerning the Company or any of its
Subsidiaries, as provided in this Section 5.2 and, if it proposes to provide
such access to information, state that such proposal could reasonably be
expected to result in a Superior Proposal and the basis for such conclusion. The
Company also shall promptly notify Parent of any significant development
relating to any inquiries, discussions, negotiations, proposals or requests for
information concerning any Third-Party Acquisition. The Company shall keep
Parent informed of the status of any such negotiations and shall further update,
to the extent of any significant developments, the information required to be
provided in each notice upon the request of Parent.
(c) Except as provided in subparagraph (d) below, neither the Board
nor the Independent Committee shall (i) withdraw or modify, or propose to
withdraw or modify, or refuse or fail at Parent's request to reaffirm, (A) the
approval by the Board of this Agreement or the Merger, (B) the favorable
recommendation of the Independent Committee and the Board with respect thereto,
or (C) the Board's recommendation to stockholders of the Company that they vote
their shares of Company Common Stock in favor of adoption of this Agreement, and
the Board's direction that this Agreement be submitted to stockholders for such
adoption; (ii) approve or recommend, or propose publicly to approve or
recommend, any Third-Party Acquisition; or (iii) cause the Company to enter into
any agreement in principle, letter of intent, contract, agreement (whether
written or oral) or memorandum of understanding (each, a "Company Acquisition
Agreement") related to any Third-Party Acquisition.
(d) Notwithstanding the foregoing, in the event that the Independent
Committee determines in good faith, after receipt of advice of its outside legal
counsel, that failure to take such action would constitute a breach of the
Board's fiduciary duties to the Company's stockholders under applicable law, the
Independent Committee (and the Board acting on the recommendation of the
Independent Committee) may (i) withdraw or modify its approval or recommendation
of this Agreement and the Merger and disclose such withdrawal or modification to
the Company's stockholders; and, (ii) solely in relation to a Third-Party
Acquisition that constitutes a Superior Proposal, provided the Board, the
Independent Committee and the Company have not violated the terms of this
Section 5.2, (A) recommend such Superior Proposal, and/or (B) following the
Stockholders Meeting, if the Company Stockholder Approval shall not have been
obtained, terminate this Agreement in accordance with Section 7.1(d)(iii) hereof
and, contemporaneously with such termination, cause the Company to enter into a
Company Acquisition Agreement with respect to such Superior Proposal, provided,
however, that (x) prior to taking any of the foregoing actions, the Company
shall have paid Parent by wire transfer the amount payable pursuant to Section
7.3 and (y) prior to taking the action described in clause (B) above, the
Independent Committee shall have (1) given Parent at least three Business Days'
prior written notice that the Company intends to terminate this Agreement and
provided Parent with a reasonable opportunity to respond to any such Superior
Proposal (which response could include a proposal to revise the terms of the
Transactions) and (2) fully considered any such response by Parent and concluded
that, notwithstanding such response, such proposal continues to be a Superior
Proposal in relation to the Transactions, as the terms of the Transactions may
be proposed to be revised by Parent's response. Notwithstanding the foregoing,
the obligation of the Company to duly call, give notice of, convene and hold the
Stockholders Meeting in accordance with Section 2.3 hereof shall not be affected
by the commencement, proposal, public disclosure or communication to the Company
of a Third-Party Acquisition or a Superior Proposal or by the taking of any
action by the Board or the Independent Committee in accordance with this Section
5.2. No action taken by the Board or the Independent Committee in accordance
with this Section 5.2 shall constitute a breach of any other section of this
Agreement.
(e) As used in this Agreement, the term "Third-Party Acquisition"
shall mean any of the following events: (i) the acquisition of the Company by
merger, purchase of stock or assets, joint venture or otherwise by, or a "merger
of equals" with, any Person (which includes a "person," as such term is defined
in Section 13(d)(3) of the Exchange Act) other than a member of the Acquisition
Group (a "Third Party"); (ii) the acquisition by a Third Party of any material
portion (which shall include twenty percent (20%) or more) of the assets of the
Company and its Subsidiaries, taken as a whole; (iii) the acquisition by a Third
Party of twenty percent (20%) or more of the outstanding shares of Company
Common Stock; (iv) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend; or (v) the repurchase by
the Company or any of its Subsidiaries of more than twenty percent (20%) of the
outstanding shares of Company Common Stock.
(f) For purposes of this Agreement, "Superior Proposal" means any bona
fide written proposal to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the shares of Company Common Stock
then outstanding or all or substantially all of the assets of the Company to be
followed by a pro rata distribution of the sale proceeds to stockholders of the
Company, that (i) is not subject to any financing conditions or contingencies,
(ii) provides holders of Company Common Stock with per share consideration that
the Independent Committee determines in good faith, after receipt of advice of
its financial advisor, is more favorable from a financial point of view than the
consideration to be received by holders of Company Common Stock in the Merger,
(iii) is determined by the Independent Committee in its good faith judgment,
after receipt of advice of its financial advisor and outside legal counsel, to
be likely of being completed (taking into account all legal, financial,
regulatory and other aspects of the proposal, the Person making the proposal and
the expected timing to complete the proposal), (iv) does not, in the definitive
Company Acquisition Agreement, contain any "due diligence" conditions, and (v)
has not been obtained by or on behalf of the Company in violation of this
Section 5.2.
5.3 Access to Information; Confidentiality.
(a) Until the Effective Date, the Company shall (and shall cause its
Subsidiaries to) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of Parent, reasonable access during
normal business hours to its properties, books, contracts, commitments and
records; furnish to Parent all information concerning its business, properties,
and personnel as Parent may reasonably request or has reasonably requested; and
use reasonable best efforts to make available during normal business hours to
the officers, employees, accountants, counsel, financing sources and other
representatives of Parent the appropriate individuals (including management
personnel, attorneys, accountants and other professionals) for discussion of the
Company's business, properties, prospects and personnel as Parent may reasonably
request.
(b) Parent shall keep all information disclosed to the persons
identified in clause (a) above pursuant to this Agreement confidential in
accordance with the terms of the Confidentiality Agreement.
(c) As soon as practicable (but in no case later than 21 days) after
the execution of this Agreement, the Company shall permit Parent to
electronically link the Company's financial reporting system to Parent's
financial reporting consolidation system ("Hyperion"). The link to Hyperion will
be completed by Parent's financial reporting staff, with assistance from the
Company's accounting staff, at no incremental cost to the Company. Parent will
provide the necessary Hyperion and ancillary software to be installed on a
computer in the Company's accounting department.
5.4 Consents; Approvals.
(a) The Company, Parent and Merger Sub shall each use its reasonable
best efforts (which efforts, to the extent reasonably practicable, shall be made
prior to the consummation of the Merger), and cooperate with each other, to
obtain as promptly as practicable all consents, waivers, approvals,
authorizations or orders (including all rulings and approvals of all United
States and foreign Governmental Entities), and the Company, Parent, PHH and
Merger Sub shall make all filings (including all filings with United States and
foreign Governmental Entities) required in connection with the authorization,
execution and delivery of this Agreement by the Company, Parent, PHH and Merger
Sub and the consummation by them of the Transactions.
(b) Each party hereto shall make an appropriate filing of a
notification and report form pursuant to the HSR Act with respect to the
Transactions within fifteen Business Days after the date hereof, shall as
promptly as practicable supply any additional information and documentary
material that may be requested pursuant to the HSR Act, and shall use reasonable
best efforts to obtain early termination of the waiting period under the HSR
Act. In addition, each party hereto shall promptly make any other filing that
may be required under any antitrust law or by any antitrust authority and shall
as promptly as practicable supply and additional information and documentary
material that may be required in connection therewith.
5.5 Indemnification and Insurance.
(a) From and after the Effective Date, Parent and the Surviving
Corporation and their respective successors shall indemnify, defend and hold
harmless each Person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer or director of the
Company or any of the Subsidiaries (the "Covered Parties") against all losses,
claims, damages, costs, expenses (including reasonable attorneys' fees and
expenses), liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (which approval shall not be unreasonably
withheld or delayed) incurred in connection with any threatened or actual
action, suit or proceeding based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director or officer of the
Company ("Indemnified Liabilities"), including all Indemnified Liabilities based
in whole or in part on, or arising in whole or in part out of, this Agreement or
the transactions contemplated hereby, in each case to the fullest extent that a
corporation is permitted by law to indemnify its own directors or officers, as
the case may be. In the event any such claim, action, suit, proceeding or
investigation is brought against any Covered Party, the indemnifying parties
shall assume and direct all aspects of the defense thereof, including
settlement, and the Covered Party shall cooperate in the defense of any such
matter. The Covered Party shall have a right to participate in (but not control)
the defense of any such matter with its own counsel and at its own expense.
Notwithstanding the right of the indemnifying parties to assume and control the
defense of such litigation, claim or proceeding, such Covered Party shall have
the right to employ separate counsel and to participate in the defense of such
litigation, claim or proceeding, and the indemnifying parties shall bear the
fees, costs and expenses of such separate counsel and shall pay such fees, costs
and expenses promptly after receipt of an invoice from such Covered Party if (i)
the use of counsel chosen by the indemnifying parties to represent such Covered
Party would present such counsel with a conflict of interest, (ii) the
defendants in, or targets of, any such litigation, claim or proceeding shall
have been advised by counsel that there may be legal defenses available to it or
to other Covered Parties which are different from or in addition to those
available to the indemnifying parties or (iii) the indemnifying parties shall
not have employed counsel satisfactory to such Covered Party, in the exercise of
the Covered Party's reasonable judgment, to represent such Covered Party within
a reasonable time after notice of the institution of such litigation, claim or
proceeding. The Covered Parties as a group shall be represented by a single law
firm (plus no more than one local counsel in any jurisdiction) with respect to
each such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Covered Parties. The indemnifying parties shall not settle any such matter
unless (i) the Covered Party gives prior written consent, which shall not be
unreasonably withheld or delayed, or (ii) the terms of the settlement provide
that the Covered Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the Covered
Party, and the settlement discharges all rights against the Covered Party with
respect to such matter. Any Covered Party wishing to claim indemnification under
this Section 5.5, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent and the Surviving Corporation (but
the failure so to notify shall not relieve the indemnifying party from any
liability which it may have under this Section 5.5, except to the extent such
failure materially prejudices the indemnifying parties). Each Covered Party
shall be entitled to the advancement of expenses to the full extent permitted by
law in connection with any such action (subject to tendering any undertaking to
repay such expenses, to the extent required by applicable law). Notwithstanding
the foregoing, in the event that there is any conflict between this Section
5.5(a) and the terms of the Amended and Restated Certificate of Incorporation or
Amended and Restated By-Laws of the Company, the Amended and Restated
Certificate of Incorporation and/or Amended and Restated By-laws, as the case
may be, shall prevail.
(b) All rights to indemnification, all limitations on liability and
all rights to advancement of expenses existing in favor of a Covered Party as
provided herein, in the Company's Amended and Restated Certificate of
Incorporation, Amended and Restated By-Laws or other indemnification agreements
as in effect as of the date hereof shall survive the Merger and shall continue
in full force and effect, without any amendment thereto, for a period of six
years from the Effective Time to the extent such rights are consistent with
applicable law; provided that in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims; provided further, that any determination required to be made with
respect to whether a Covered Party's conduct complies with the standards set
forth under applicable law, the Company's Amended Restated Certificate of
Incorporation, Amended and Restated By-Laws or such agreements, as the case may
be, shall be made by independent legal counsel selected by the Covered Party and
reasonably acceptable to the Surviving Corporation.
(c) In the event that Cendant or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 5.5, proper
provision shall be made so that such successors, assigns and transferees, as the
case may be, assume the obligations set forth in this Section 5.5, and none of
the actions described in the foregoing clauses (i) or (ii) shall be taken until
such provision is made.
(d) For a period of six years after the Effective Time, Cendant shall
cause the Surviving Corporation and its successors to maintain in effect,
without any lapses in coverage, policies of directors' and officers' liability
insurance (or a "tail" policy) for the benefit of those Persons who are covered
by the Company's directors' and officers' liability insurance policies as of the
date hereof, providing coverage with respect to matters occurring prior to the
Effective Time that is at least equal to the coverage provided under the
Company's current directors' and officers' liability insurance policies to the
extent that such liability insurance can be maintained at an annual cost to the
Surviving Corporation of not greater than 200 percent of the premium for the
current Company directors' and officers' liability insurance; provided that if
such insurance (or "tail" policy) cannot be so maintained at such cost, the
Surviving Corporation shall maintain as much of such insurance as can be so
maintained at a cost equal to 200 percent (200%) of the current annual premiums
of the Company for such insurance.
5.6 Employee Benefits.
(a) During the period commencing at the Effective Time and ending on
December 31, 2001, Parent shall cause all current and former employees and
officers of the Company and its Subsidiaries who are entitled to receive
compensation and benefits as of the Effective Time, other than employees covered
by collective bargaining agreements, to receive (i) the salary or wage level and
bonus opportunity, to the extent applicable, not materially less favorable in
the aggregate than that in effect on the date hereof and (ii) benefits,
perquisites and other terms and conditions of employment that are not materially
less favorable in the aggregate than the benefits, perquisites and other terms
and conditions that they were entitled to receive on the date hereof.
(b) Subject to Section 5.6(a) hereof, from and after the Effective
Time, Parent shall honor, pay, perform and satisfy any and all liabilities,
obligations and responsibilities to, or in respect of, each employee and officer
of the Company and its Subsidiaries, and each former employee and officer of the
Company and its Subsidiaries, as of the Effective Time arising under the terms
of, or in connection with, any employee benefit, fringe benefit, deferred
compensation or incentive compensation plan or arrangement or any employment,
consulting, retention, severance, change-of-control or similar agreement, in
each case, to the extent listed in Section 3.14(a) or 3.16(a) of the Company
Disclosure Letter and in accordance with the terms thereof in effect on the date
hereof. Without limiting the generality of the foregoing, until December 31,
2001, Parent shall keep in effect all severance and retention plans, practices
and policies that are applicable to employees and officers of the Company and
its Subsidiaries as of the date hereof.
(c) Parent shall, or shall cause the Surviving Corporation and its
Subsidiaries to, give Continuing Employees full credit for purposes of
eligibility and vesting under any employee benefit plans or arrangements
maintained by Parent, the Surviving Corporation or any Subsidiary of Parent or
the Surviving Corporation for such Continuing Employees' service with the
Company, any Subsidiary of the Company or any of their respective predecessors
to the same extent recognized by the Company, any Subsidiary of the Company or
any such predecessor for similar purposes immediately prior to the Effective
Time. In addition, Parent shall, or shall cause the Surviving Corporation and
its Subsidiaries to, give Continuing Employees full credit for purposes of the
determination of benefits under any employee benefit plans or arrangements in
effect as of the date hereof maintained by Parent for such Continuing Employees'
service with the Company, any Subsidiary of the Company or any of their
respective predecessors to the same extent recognized by the Company, any
Subsidiary of the Company or any such predecessor for similar purposes
immediately prior to the Effective Time. Parent shall, or shall cause the
Surviving Corporation and its Subsidiaries to, (i) waive all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Continuing Employees
under any welfare plan that such employees may be eligible to participate in
after the Effective Time, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Effective Time under any welfare plan maintained for the
Continuing Employees immediately prior to the Effective Time, and (ii) provide
each Continuing Employee with credit for any co-payments and deductibles paid
prior to the Effective Time in satisfying any applicable co-payment, deductible
or out-of-pocket requirements in respect of the year during which the Effective
Time occurs under any welfare plans that such employees are eligible to
participate in after the Effective Time to the same extent as if those
deductibles or co-payments had been paid under the welfare plans for which such
employees are eligible after the Effective Time.
(d) Nothing contained herein shall constitute assurance of continued
employment of any officer or employee of the Company or any of its Subsidiaries
following the Effective Time.
5.7 Note Tender Offer. Parent may, in its sole and absolute
discretion, commence a tender offer and consent solicitation to repurchase any
and all of the outstanding Notes (the "Note Tender Offer") on terms and
conditions determined solely by Parent. The Note Tender Offer shall be effected
in compliance with applicable laws and SEC rules and regulations. The Company
shall cooperate with Parent, PHH and Merger Sub in connection with the
preparation of all documents and the making of all filings required in
connection with the Note Tender Offer and shall use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate the Note
Tender Offer; provided, however, that it is understood and agreed by the parties
hereto that (i) such Note Tender Offer shall be consummated no earlier than the
Closing Date, (ii) the Company shall have no obligation to provide any funds to
consummate the Note Tender Offer, and (iii) Parent or PHH shall provide the
funds required to consummate the Note Tender Offer on or after the Effective
Time, together with all related fees and expenses.
5.8 Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent (on behalf of itself, PHH and Merger Sub) shall
give prompt notice to the Company, of (i) the occurrence or non-occurrence of
any event known to it, the occurrence or non-occurrence of which is reasonably
likely to cause any representation or warranty of such party contained in this
Agreement to be materially untrue or inaccurate, (ii) any failure of the Company
or Parent, PHH or Merger Sub, as the case may be, to comply with or satisfy, or
the occurrence or non-occurrence of any event known to it, the occurrence or
non-occurrence of which is reasonably likely to cause the failure by such party
materially to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; (iii) the occurrence of any other
event known to it which would be reasonably likely (A) to have a Material
Adverse Effect or (B) to cause any condition set forth in Article VI to be
unsatisfied in any material respect at any time prior to the Effective Time; or
(iv) any action, suit, proceeding, inquiry or investigation pending or, to the
knowledge of the Company, threatened which questions or challenges the validity
of this Agreement; provided, however, that the delivery of any notice pursuant
to this Section 5.8 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
5.9 Further Action. Upon the terms and subject to the conditions
hereof each of the parties hereto shall use its reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement.
5.10 Public Announcements. Parent, PHH, Merger Sub and the Company
shall consult with each other before issuing any press release or making any
public statement with respect to this Agreement, the Merger or the other
Transactions and shall not issue any such press release or make any such public
statement without the prior consent of the other parties, which shall not be
unreasonably withheld; provided, however, that any party may, without the prior
consent of the others, issue such press release or make such public statement as
may, upon the advice of counsel, be required by law or the rules and regulations
of The New York Stock Exchange, in advance of obtaining such prior consent, in
which case, the parties shall cooperate to reach mutual agreement as to the
language of any such report, statement or press release. Immediately following
the execution and delivery of this Agreement, Parent, PHH, Merger Sub and the
Company are each issuing press releases to be mutually agreed upon with respect
to this Agreement, the Merger and the other Transactions.
5.11 Transfer Taxes. Parent shall pay any real property or other
similar transfer Taxes incurred in connection with the consummation of the Offer
and the Merger.
5.12 Financial Statements. Upon request by Parent or PHH, the Company
shall use commercially reasonable efforts to cooperate with Parent and PHH in
connection with preparing such financial statements as are required by
applicable law and by SEC rules and regulations to be filed by PHH with the SEC
in connection with the prospectus for the medium term notes to be issued by PHH;
such cooperation shall include, without limitation, providing all information
reasonably requested by Parent or PHH.
5.13 Section 16 Matters. The Company shall take all such steps as may
be required to cause any dispositions of Company Common Stock (including
derivative securities with respect to the Company Common Stock) resulting from
the Transactions contemplated by this Agreement by each officer or director who
is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to the Company to be exempt under Rule 16b-3 promulgated under the
Exchange Act, such steps to be taken in accordance with the No-Action Letter,
dated January 12, 1999, issued by the Commission to Skadden, Arps, Slate,
Meagher & Flom LLP.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver (to the extent permitted by applicable law) at or
prior to the Effective Time of the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval shall have
been obtained at or prior to the Effective Time in accordance with the DGCL.
(b) No Injunction or Statute. No statute, rule, regulation, order,
decree, judgment, injunction or ruling shall have been enacted, entered,
promulgated or enforced by any court or other Governmental Entity of competent
jurisdiction which, in any such case, (i) prohibits or restricts the ownership
or operation by Parent (or any of its Affiliates or Subsidiaries) of a material
portion of the Company's and its Subsidiaries' businesses or assets, or compels
Parent (or any of its Affiliates or Subsidiaries) to dispose of or hold separate
any material portion of the Company's and its Subsidiaries' businesses or
assets, or (ii) restrains in any material respect or prohibits the consummation
of the Merger, which has not been vacated, dismissed or withdrawn prior to the
Effective Time. The Company and Parent shall use their respective best efforts
to have any of the foregoing vacated, dismissed or withdrawn by the Effective
Time.
(c) No Action. No action, suit or proceeding shall have been
instituted, or shall be pending or threatened by a Governmental Entity (i)
seeking to restrain in any material respect or prohibit the consummation of the
Merger or the performance of any of the other Transactions contemplated by this
Agreement, (ii) seeking to obtain from the Company, Parent, PHH or Merger Sub
any damages that would result in a Material Adverse Effect or (iii) seeking to
impose the restrictions, prohibitions or limitations referred to in subsection
(b) above.
(d) HSR Act. Any waiting period applicable to the Merger under the HSR
Act and any applicable foreign competition or antitrust laws shall have been
terminated or expired.
6.2 Conditions to Obligations of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment or waiver (to the extent permitted by applicable law) at or prior to
the Effective Time of the following conditions:
(a) The representations and warranties of Parent, PHH and Merger Sub
set forth in this Agreement shall be true and correct in all respects as of the
Effective Time as though made on or as of such time (ignoring for purposes of
this determination any materiality or Material Adverse Effect qualifiers
contained within individual representations and warranties), except for (i)
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which need
only be true and correct as of such date or with respect to such period and (ii)
such failures to be true and correct as would not, individually or in the
aggregate, reasonably be expected to materially impair the ability of Parent,
PHH or Merger Sub to consummate the Merger.
(b) Parent, PHH and Merger Sub shall have performed and complied in
all material respects with all obligations, agreements and covenants required by
this Agreement to be performed and complied with by it prior to the Effective
Time.
(c) The Company shall have received a certificate signed by the chief
financial officer of Parent, dated as of the Closing Date, to the effect that,
to the best of such officer's knowledge, the conditions set forth in Section
6.2(a) and Section 6.2(b) have been satisfied.
6.3 Conditions to Obligations of Parent and Merger Sub to Effect the
Merger. The obligation of Parent, PHH and Merger Sub to effect the Merger shall
be subject to the fulfillment or waiver (to the extent permitted by applicable
law) at or prior to the Effective Time of the following conditions:
(a) The representations and warranties of the Company set forth in
this Agreement shall be true and correct in all respects as of the Effective
Time as though made on or as of such time (ignoring for purposes of this
determination any materiality or Material Adverse Effect qualifiers contained
within individual representations and warranties), except for (i) those
representations and warranties that address matters only as of a particular date
or only with respect to a specific period of time which need only be true and
correct as of such date or with respect to such period and (ii) such failures to
be true and correct as would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(b) The Company shall have performed and complied in all material
respects with all obligations, agreements and covenants required by this
Agreement to be performed or complied with by it prior to the Effective Time,
except for such failures to perform or comply as would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
(c) Parent shall have received a certificate signed by the chief
financial officer of the Company, dated as of the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set forth in
Section 6.3(a) and Section 6.3(b) have been satisfied.
(d) Neither the Board nor the Independent Committee (i) shall have
withdrawn, modified or changed its approval or recommendation of this Agreement,
the Merger or the other Transactions in any manner which Parent reasonably
determines to be adverse to Parent, (ii) shall have recommended the approval or
acceptance of a Superior Proposal or Third-Party Acquisition from a Person or
entity other than a member of the Acquisition Group, or (iii) shall have
executed any Company Acquisition Agreement.
(e) No event, change, development or circumstance shall have occurred
or shall exist which is reasonably expected to result in a Material Adverse
Effect.
(f) The Company shall have obtained the consents, approvals and
waivers set forth in Section 6.3(f) of the Company Disclosure Schedule.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, notwithstanding adoption of this Agreement by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Board of
Directors of each of the Company (provided such termination has been approved by
the Independent Committee) and Parent; or
(b) by either the Company (provided such termination has been approved
by the Independent Committee) or Parent as follows:
(i) if the Effective Time shall not have occurred on or prior to
June 30, 2001; provided, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger to be consummated on or prior to such
date; or
(ii) if a Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (which order, decree, ruling or other action the parties hereto shall
have used their best efforts to lift); or
(iii) if the Company Stockholder Approval shall not have been
obtained at the Stockholders Meeting; or
(c) by Parent, on behalf of itself, PHH and Merger Sub, as follows:
(i) upon a material breach of any covenant or agreement set forth
in this Agreement (a "Terminating Breach") on the part of the Company; provided
that, if such Terminating Breach is curable on or prior to the earlier of (A) 60
days following notice of such Terminating Breach and (B) June 30, 2001 by the
Company through the exercise of its reasonable best efforts and for so long as
the Company continues to exercise such reasonable best efforts, Parent may not
terminate this Agreement under this Section 7.1(c)(i) until the earlier of (A)
60 days following notice of such Terminating Breach and (B) June 30, 2001; or
(ii) (x) the Independent Committee or the Board shall (A)
withdraw, modify or change its approval or recommendation of this Agreement, the
Merger or the other Transactions in any manner which Parent reasonably
determines to be adverse to Parent; (B) approve or recommend to the stockholders
of the Company a Third-Party Acquisition or a Superior Proposal; (C) violate any
of the provisions of Section 5.2 hereof; (D) take any public position or make
any disclosures to the Company's stockholders which has the effect of any of the
foregoing; or (E) resolve to enter into a Company Acquisition Agreement relating
to a Third-Party Acquisition or a Superior Proposal; or (y) the Company shall
(A) execute a Company Acquisition Agreement relating to a Third-Party
Acquisition or a Superior Proposal (B) violate any of the provisions of Section
5.2 hereof; or
(iii) if any representation or warranty of the Company set forth
in this Agreement shall have become untrue or shall have been untrue when made,
if such failure to be true and correct, individually or in the aggregate, would
result in a Material Adverse Effect; provided that, if such failure is curable
on or prior to the earlier of (A) 60 days following notice of such Terminating
Breach and (B) June 30, 2001 by the Company through the exercise of its
reasonable best efforts and for so long as the Company continues to exercise
such reasonable best efforts, Parent may not terminate this Agreement under this
Section 7.1(c)(iii) until the earlier of (A) 60 days following notice of such
Terminating Breach and (B) June 30, 2001; or
(d) by the Company (provided such termination has been approved by the
Independent Committee) as follows:
(i) upon a Terminating Breach on the part of Parent, PHH or
Merger Sub; provided -------- that, if such Terminating Breach is curable on or
prior to the earlier of (A) 60 days following notice of such Terminating Breach
and (B) June 30, 2001 by Parent, PHH or Merger Sub through the exercise of its
reasonable best efforts and for so long as Parent, PHH and Merger Sub continue
to exercise such reasonable best efforts, the Company may not terminate this
Agreement under this Section 7.1(d)(i) until the earlier of (A) 60 days
following notice of such Terminating Breach and (B) June 30, 2001; or
(ii) if any representation or warranty of Parent, PHH or Merger
Sub, respectively, set forth in this Agreement shall have been untrue in any
material respect or shall have been untrue in any material respect when made;
provided that, if such failure is curable prior to the earlier of (A) 60 days
following notice of such Terminating Breach and (B) June 30, 2001 by Parent, PHH
or Merger Sub, as the case may be, through the exercise of its reasonable best
efforts and for so long as Parent, PHH or Merger Sub, as the case may be,
continues to exercise such reasonable best efforts, the Company may not
terminate this Agreement under this Section 7.1(d)(ii) until the earlier of (A)
60 days following notice of such Terminating Breach and (B) June 30, 2001; or
(iii) if, following the Stockholders Meeting, (A) the Company
Stockholder Approval shall not have been obtained, (B) the Company concurrently
executes and delivers a definitive agreement with respect to a Superior Proposal
and (C) the Independent Committee determines in good faith, after receipt of
advice of its outside legal counsel, that a failure to terminate this Agreement
in order to enter into a definitive agreement with regard to such Superior
Proposal would constitute a breach of its fiduciary duties to the Company's
stockholders under applicable law; provided that, prior to such termination, (x)
the Company has given Parent three (3) Business Days' advance notice of the
Company's intention to accept such Superior Proposal and shall have complied in
all respects with the provisions of Section 2.6 and Section 5.2; and (y) the
Company shall have paid by wire transfer the Fee and the Parent Expenses
pursuant to Section 7.3(b).
7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
Affiliates, directors, officers, stockholders, representatives or agents except
for any obligation of the Company or Parent set forth in Article VII hereof, if
any. Notwithstanding the foregoing, or any other provision of this Agreement
(including Section 7.3), nothing herein shall relieve the Company, Parent, PHH
or Merger Sub from liability for any breach hereof.
7.3 Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, to Parent, the Parent
Expenses (as defined below) actually incurred and a fee of $28,000,000 (the
"Fee") upon the first to occur of any of the following events:
(i) the termination of this Agreement by Parent or the Company
pursuant to subsection (b)(i) of Section 7.1, or the termination of this
Agreement by Parent pursuant to Subsection (c)(i) or (c)(iii) of Section 7.1;
provided, that prior to such termination, the Company becomes aware that any
Person has made or intends to make a proposal relating to a Third-Party
Acquisition and, within twelve months following the date of such termination, a
Third-Party Acquisition is consummated or a definitive agreement with respect to
a Third-Party Acquisition is executed by the Company;
(ii) the termination of this Agreement by Parent pursuant to
Section 7.1(c)(ii);
(iii) the termination of this Agreement by the Company pursuant
to Section 7.1(d)(iii); or
(iv) the termination of this Agreement by Parent pursuant to
Section 7.1(b)(iii); provided, that a Third-Party Acquisition shall be publicly
announced or otherwise made known to the public at or prior to the Stockholders
Meeting and, within twelve months following the date of such termination, a
Third-Party Acquisition is consummated or a definitive agreement with respect to
a Third-Party Acquisition is executed by the Company.
(c) "Parent Expenses" means all out-of-pocket expenses and fees
(including fees and expenses payable to all banks, investment banking agents and
counsel for arranging, committing to provide or providing any financing for the
Transactions contemplated hereby or structuring the Transactions contemplated
hereby and all fees of counsel, accountants, experts and consultants to Parent,
PHH and Merger Sub and all printing and advertising expenses) actually incurred
or accrued by either of them or on their behalf in connection with the
Transactions, including the financing thereof, and actually incurred or accrued
by banks, investment banking firms, other financial institutions and other
Persons and incurred by Parent, PHH and Merger Sub in connection with the
negotiation, preparation, execution and performance of this Agreement, the
structuring and financing of the Transactions and any financing commitments or
agreements relating thereto; provided, however, that in no event shall the
amount of Parent Expenses exceed $2,500,000.
(d) The Fee and Parent Expenses shall be paid by wire transfer of same
day funds to an account designated by Parent within two Business Days after a
demand for payment following the first to occur of any of the events described
in Section 7.3(b); provided that, in the event of a termination of this
Agreement under Section 7.1(d)(iii), the Fee and Parent Expenses shall be paid
as therein provided as a condition to the effectiveness of such termination.
(e) The agreements contained in this Section 7.3 are an integral part
of the Transactions and do not constitute a penalty. In the event of any dispute
between the Company and Parent as to whether the Fee and Parent Expenses under
this Section 7.3 are due and payable, the prevailing party shall be entitled to
receive from the other party the reasonable costs and expenses (including
reasonable legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, relating to such dispute. Interest
shall be paid on the amount of any unpaid Fee or Parent Expenses at the publicly
announced prime rate of Citibank, N.A. from the date such Fee or Parent Expenses
was required to be paid.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Effective
Time of the Merger; provided, that the agreements contained in Article I,
Article II, Sections 5.5 and 5.6 and this Article VIII shall survive the
Effective Time.
8.2 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (provided that any
notice received by facsimile transmission or otherwise at the addressee's
location on any Business Day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
Business Day), by reliable overnight delivery service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
If to Parent, PHH or Merger Sub:
Cendant Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
Attention: General Counsel
Telecopier No.: 973-496-5335
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Attention: Patricia Moran Chuff, Esq.
Telecopier No.: 302-651-3001
If to the Company:
Avis Group Holdings, Inc.
World Headquarters
900 Old Country Road
Garden City, New York 11530
Attention: General Counsel
Telecopier No.: 516-222-6922
with copies to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: John M. Reiss, Esq.
Telecopier No.: 212-354-8113
and to the Special Committee at:
JER Partners
1650 Tysons Blvd.
Suite 1600
McLean, VA 22102
Attention: Deborah Harmon
Telecopier: (703) 714-8124
with copies to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005-1702
Attention: Richard E. Farley, Esq.
Telecopier No.: 212-269-5420
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph; provided that such notification shall only
be effective on the date specified in such notice or five (5) Business Days
after the notice is given, whichever is later. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.
8.3 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any of the parties
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that Merger Sub may assign any of its rights and
obligations hereunder to a wholly owned Subsidiary of Parent which is a Delaware
corporation; provided, however, that no such assignment shall relieve Merger Sub
of its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and permitted assigns. Notwithstanding anything contained
in this Agreement to the contrary, except for the provisions of Sections 5.5 and
5.6, nothing in this Agreement, expressed or implied, is intended to confer on
any Person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
8.4 Entire Agreement. This Agreement, the Company Disclosure Letter,
the Parent Disclosure Letter and any documents delivered by the parties in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter of this Agreement and supersede all prior
representations, warranties, agreements and understandings among the parties,
both written and oral, with respect thereto, except the Confidentiality
Agreement which shall continue in full force and effect; provided that if there
is any conflict between the Confidentiality Agreement and this Agreement, this
Agreement shall prevail.
8.5 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto, by action taken by their respective boards of
directors and, with respect to the Company, by the Independent Committee, at any
time before or after the Company Stockholder Approval, but after any such
Company Stockholder Approval, no amendment shall be made which by law requires
the further approval of stockholders without obtaining such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
8.6 Governing Law; Consent to Jurisdiction.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to the principles of
conflicts of laws thereof.
(b) Each of the parties hereto (i) consents to submit itself to the
exclusive personal jurisdiction of any Delaware state court or any federal court
located in the State of Delaware in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (ii)
agrees that it shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.
8.7 Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies of this Agreement
each signed by less than all, but together signed by all of the parties hereto.
This Agreement shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
8.8 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
8.9 Interpretation. When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The table of contents to this Agreement is
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns. Each of
the parties has participated in the drafting and negotiation of this Agreement.
If an ambiguity or question of intent or interpretation arises, this Agreement
must be construed as if it is drafted by all the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement. The inclusion of any
matters in the Company Disclosure Letter or the Parent Disclosure Letter in
connection with any representation, warranty, covenant or agreement that is
qualified as to materiality or "Material Adverse Effect" shall not be an
admission by the Company that such matters is material or would have a Material
Adverse Effect.
8.10 Waivers. No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. Any term,
covenant or condition of this Agreement may be waived at any time by the party
which is entitled to the benefit thereof, but only by a written notice signed by
such party expressly waiving such term or condition. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or be construed
as a waiver of any prior or subsequent breach of the same or any other provision
hereunder.
8.11 Incorporation of Annex and Disclosure Letters. The Company
Disclosure Letter and the Parent Disclosure Letter are hereby incorporated in
this Agreement and made a part of this Agreement for all purposes as if fully
set forth in this Agreement.
8.12 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent (and only to the extent) of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
8.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement was
not performed in accordance with its specific terms or as otherwise breached and
that money damages would not be an adequate remedy for any breach of this
Agreement. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court referred to
in Section 8.6(b), this being in addition to any other remedy to which they are
entitled at law or in equity or pursuant to this Agreement. In any such action
for specific performance, each of the parties shall waive (i) the defense of
adequacy of a remedy at law and (ii) any requirement for the securing and
posting of any bond.
8.14 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
8.15 Execution. This Agreement may be executed by facsimile signatures
by any party and such signature shall be deemed binding for all purposes hereof,
without delivery of an original signature being thereafter required.
8.16 Date for any Action. In the event that any date on which any
action is required to be taken hereunder by any of the Parties hereto is not a
Business Day, such action shall be required to be taken on the next succeeding
day which is a Business Day.
8.17 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each Party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 5.5 (which is intended to be for the benefit of
the Persons covered thereby and may be enforced by such Persons).
8.18 Certain Definitions. As used in this Agreement:
(a) The term "Affiliate," as applied to any Person, shall mean any
other Person directly or indirectly controlling, controlled by, or under common
control with, that Person; for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by,"
"under common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
(b) The term "Associate" has the meaning set forth in Rule 12b-2 under
the Exchange Act.
(c) A Person shall be deemed to "beneficially" own securities if such
Person would be the beneficial owner of such securities under Rule 13d-3 under
the Exchange Act, including securities which such Person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time).
(d) The term "Business Day" means any day on which commercial banks
are open for business in New York, New York other than a Saturday, a Sunday or a
day observed as a holiday in New York, New York under the laws of the State of
New York or the federal laws of the United States.
(e) The term "Person" shall include individuals, corporations,
partnerships, trusts, limited liability companies, associations, unincorporated
organizations, joint ventures, other entities, groups (which term shall include
a "group" as such term is defined in Section 13(d)(3) of the Exchange Act),
labor unions or Governmental Entity.
(f) The term "Subsidiary," when used with respect to any party, means
any corporation or other organization, whether incorporated or unincorporated,
of which such party directly or indirectly owns or controls at least a majority
of the securities or other interests having by their terms ordinary voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
organization of which such party is a general partner.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
CENDANT CORPORATION
By: /s/ Henry R. Silverman
------------------------------------
Name: Henry R. Silverman
Title: Chairman, President and
Chief Executive Officer
PHH CORPORATION
By: /s/ James E. Buckman
------------------------------------
Name: James E. Buckman
Title: Executive Vice President
and General Counsel
AVIS ACQUISITION CORP.
By: /s/ James E. Buckman
------------------------------------
Name: James E. Buckman
Title: Executive Vice President
and General Counsel
AVIS GROUP HOLDINGS, INC.
By: /s/ Kevin M. Sheehan
------------------------------------
Name: Kevin M. Sheehan
Title: President, Corporate and
Business Affairs,
Chief Financial Officer
<PAGE>
<TABLE>
<CAPTION>
Defined Terms
Page
<S> <C>
Acquisition.........................................................................................1
Acquisition Group...................................................................................1
Affiliate..........................................................................................56
Agreement...........................................................................................1
Associate..........................................................................................56
Assumed Option......................................................................................8
Assumed Option Plan.................................................................................8
Assumed Option Plans................................................................................8
Avis Fleet.........................................................................................14
Avis License.......................................................................................25
Bear Stearns.......................................................................................27
Beneficially.......................................................................................56
Board...............................................................................................1
Business Day.......................................................................................56
Car Holdings........................................................................................1
Cendant Common Stock................................................................................8
Certificate of Merger...............................................................................2
Certificates........................................................................................5
Class B Common Stock...............................................................................13
Closing.............................................................................................3
Closing Date........................................................................................3
Code...............................................................................................20
Code...............................................................................................19
Company.............................................................................................1
Company Acquisition Agreement......................................................................34
Company Common Stock................................................................................1
Company Disclosure Letter..........................................................................14
Company SEC Reports................................................................................16
Company Stockholder Approval.......................................................................10
Confidentiality Agreement..........................................................................33
Contract...........................................................................................16
Control............................................................................................56
Covered Parties....................................................................................37
DGCL................................................................................................1
Effective Date......................................................................................3
Effective Time......................................................................................3
Elected Portion.....................................................................................8
Environmental Claim................................................................................25
Environmental Laws.................................................................................25
ERISA..............................................................................................19
ERISA Affiliate....................................................................................20
Exchange Act.......................................................................................15
Exchange Ratio......................................................................................9
Fairness Opinion...................................................................................13
Fee................................................................................................49
GAAP...............................................................................................16
Governmental Entity................................................................................15
Hazardous Materials................................................................................25
HSR Act............................................................................................15
Hyperion...........................................................................................37
Indemnified Liabilities............................................................................38
Independent Committee...............................................................................1
Intellectual Property..............................................................................25
IRS................................................................................................19
Letter of Transmittal...............................................................................5
Material Adverse Effect............................................................................12
Merger..............................................................................................1
Merger Consideration................................................................................4
Merger Sub..........................................................................................1
Merger Sub Common Stock.............................................................................5
Morgan Stanley......................................................................................1
Multiemployer Plan.................................................................................20
Note Tender Offer..................................................................................41
Notes..............................................................................................31
Option..............................................................................................8
Parent Disclosure Letter...........................................................................28
Parent Expenses....................................................................................49
Payment Agent.......................................................................................5
Payment Fund........................................................................................5
Permits............................................................................................21
Person.............................................................................................56
PHH.................................................................................................1
Plan...............................................................................................19
Plans..............................................................................................19
Preferred Stock....................................................................................13
Proxy Statement....................................................................................10
Release............................................................................................25
Retention Election..................................................................................8
SEC................................................................................................10
Securities Act.....................................................................................16
Shares..............................................................................................1
Stockholders Meeting...............................................................................10
Subsidiary.........................................................................................57
Superior Proposal..................................................................................36
Surviving Corporation...............................................................................2
Tax Return.........................................................................................19
Taxes..............................................................................................19
Terminating Breach.................................................................................47
Third Party........................................................................................35
Third-Party Acquisition............................................................................35
Transactions........................................................................................2
WARN Act...........................................................................................27
</TABLE>
