Exhibit 10.25
STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS' AGREEMENT ("Agreement"), dated as of June 30,
1999, is by and among Avis Rent A Car, Inc., a Delaware corporation
("Acquiror"), Avis Fleet Leasing and Management Corporation, a Texas corporation
and a wholly owned subsidiary of Acquiror (the "Company") and PHH Corporation, a
Maryland corporation ("Parent").
W I T N E S S E T H
WHEREAS, Acquiror, the Company, Parent and PHH Holdings Corporation,
a Texas corporation and a wholly owned subsidiary of Parent ("Holdings"), are
parties to the Agreement and Plan of Merger and Reorganization (the "Merger
Agreement"), dated as of May 22, 1999, as amended by the Amend ment to the
Agreement and Plan of Merger and Reorganization, dated as of June 30, 1999,
providing for the merger of the Company and Holdings (the "Merger") pursuant to
the Texas Business Corporation Act (the "TBCA"), on the terms and subject to the
conditions set forth therein; and
WHEREAS, upon consummation of the Merger, Parent is acquiring
7,200,000 shares of the Series A Cumulative Participating Redeemable Convertible
Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), of
the Company, which shares constitute 100% of the issued and outstanding shares
of Series A Preferred Stock; and
WHEREAS, the powers, preferences, rights and limitations of the
Series A Preferred Stock are set forth in the Certificate of Designations of the
Powers, Preferences and Special Rights of the Series A Preferred Stock (the
"Series A Certificate") filed with the Secretary of State of the State of Texas
on June 29, 1999 (capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to such terms in the Series A Certificate); and
WHEREAS, certain dividends on the Series A Preferred Stock are
payable in shares of Series B Cumulative PIK Preferred Stock, par value $0.01
per share (the "Series B Preferred Stock"), of the Company; and
WHEREAS, the powers, preferences, rights and limitations of the
Series B Preferred Stock are set forth in the Certificate of Designations of the
Powers, Preferences and Special Rights of the Series B Preferred Stock (the
"Series B Certificate," and together with the Series A Certificate, the
"Certificates") filed with the Secretary of State of the State of Texas on June
29, 1999; and
WHEREAS, shares of Series A Preferred Stock and Series B Preferred
Stock are convertible into shares of Acquiror Common Stock (as hereinafter
defined) pursuant to the terms of their respective Certificates; and
WHEREAS, as a condition to closing under the Merger Agreement, the
Company, Acquiror and Parent are entering into this Agreement to govern certain
rights and obligations of
the parties relating to the Shares (as hereinafter defined), all in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties agree as follows:
Certain Definitions
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) The term "Acquiror Common Stock" shall mean the common stock,
par value $0.01 per share, of Acquiror and any other common stock of Acquiror
issued upon recapitalization or reclassification of, or exchange for, the
Acquiror Common Stock.
(b) The term "Class B Common Stock" shall mean the non-voting class
B common stock, par value $0.01 per share, of Acquiror to be issued upon
conversion of the Shares, subject to the Class B Shareholder Approval (as
defined in Section 2.04(b) hereof).
(c) The term "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(d) The term "Shares" shall mean the 7,200,000 shares of Series A
Preferred Stock acquired by Parent upon consummation of the Merger on the date
hereof, and any shares of Series A Preferred Stock or Series B Preferred Stock
acquired by Parent after the date of this Agreement.
(e) The term "Transfer" shall mean any voluntary or involuntary
sale, assignment, transfer, pledge or other disposal of any Shares.
ARTICLE II
Representations and Warranties and Covenants of Acquiror
Section 2.01 Common Equity and Paid In Capital. Acquiror hereby
represents and warrants to Parent that, as of the date hereof, Acquiror has
caused the Company to have an aggregate of not less than $360,000,001 of common
equity and paid-in capital.
Section 2.02 Authorization of Acquiror Common Stock. The shares of
Acquiror Common Stock to be issued upon exchange of shares of Class B Common
Stock have been duly authorized and, upon such exchange, such shares of Acquiror
Common Stock will be validly issued, fully paid and nonassessable, free of
preemptive rights, with no personal liability attaching to the ownership
thereof. The transactions contemplated by the Merger Agreement, which include
the issuance of shares of the Class B Common Stock upon the conversion of the
Shares, have been duly authorized by the board of directors of Acquiror and,
upon such conversion,
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subject to receipt of the Class B Stockholder Approval (as hereinafter defined),
such shares of Class B Common Stock will be duly authorized, validly issued,
fully paid and non-assessable, free of preemptive rights, with no personal
liability attaching to the ownership thereof.
Section 2.03 Covenants Regarding Capital.
(a) Acquiror covenants to Parent that Acquiror shall at all times
prior to the second anniversary of the date hereof cause the Company to have an
aggregate of not less than $360,000,001 of common equity and paid-in capital.
(b) Until the second anniversary of the date of this Agreement,
Acquiror shall cause the Company to deliver to Parent (i) as soon as practicable
after the end of each fiscal year of the Company, but in no event later than 90
days thereafter, an unaudited balance sheet of the Company as of the end of the
fiscal year then ended, and (ii) as soon as practicable after the end of each
quarterly period of each fiscal year of the Company, but in no event later than
45 days thereafter, an unaudited balance sheet of the Company as of the end of
the quarterly period then ended, in each case, accompanied by a certificate of
the Chief Financial Officer of the Company, in form and substance reasonably
satisfactory to Parent, certifying that Acquiror is in compliance with the
requirement set forth in the immediately preceding sentence.
Section 2.04 Covenants Regarding Conversion, Exchange and
Registration Rights.
(a) Acquiror covenants to Parent that Acquiror shall honor and
comply with the provisions of each of the Certificates with respect to, and take
any actions necessary to effectuate, (i) the conversion of the Shares into Class
B Common Stock and (ii) the exchange of the Class B Common Stock into Acquiror
Common Stock, in each case, in accordance with the terms of the applicable
Certificate.
(b) In furtherance of the foregoing, Acquiror shall take all actions
required to (i) authorize the creation of the Class B Common Stock and amend its
Amended and Restated Certificate of Incorporation (the "Charter") in the manner
set forth in Exhibit A hereto, including, without limitation, obtaining any
approval of such actions by Acquiror's stockholders as may be required under the
Charter and the Delaware General Corporate Law (the "Class B Stockholder
Approval") and (ii) obtain approval of Acquiror's stockholders to the issuance
of Acquiror Common Stock and Class B Common Stock to Parent or an affiliate
thereof, pursuant to the New York Stock Exchange Shareholder Approval Policy
(the "NYSE Approval"). In furtherance of the foregoing, Acquiror shall, in
connection with its 2000 annual meeting of stockholders (which shall be held no
later than June 30, 2000), solicit proxies with respect thereto, and include
therein proposals to obtain the NYSE Approval and the Class B Stockholder
Approval, and shall recommend approval of such proposals to Acquiror's
stockholders.
(c) Acquiror has duly authorized and reserved for issuance the
shares of Acquiror Common Stock issuable upon exchange of the Class B Common
Stock; and Acquiror covenants to Parent that such shares of Acquiror Common
Stock shall remain duly authorized and
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reserved for issuance at all times during which such shares could be issued
under the terms of the Class B Common Stock.
(d) In the event that the Shares are to be automatically converted
into shares of Class B Common Stock pursuant to the terms of the respective
Certificates and the provisions of the Certificates providing for such automatic
conversion are unenforceable against the Company for any reason, Acquiror agrees
to take all actions necessary to cause all outstanding Shares to be exchanged
for the number of shares of Class B Common Stock into which such Shares would
have been converted pursuant to the terms of the Certificates had such automatic
provisions been enforceable against the Company.
(e) Acquiror covenants not to effect any Transaction (as defined in
the Certificates) unless, prior to, or at the time of, the consummation thereof,
the successor corporation (if other than Acquiror) shall assume, by written
instrument mailed to each record holder of Shares at the addresses of each as
shown on the books of the Company maintained by the Secretary of the Company,
the obligation to deliver to such holder such cash and such securities to which,
in accordance with the provisions set forth in Section 7 of the applicable
Certificate, such holder is entitled, and such successor entity shall have
mailed to each record holder of Shares at the addresses of each as shown on the
books of the Company maintained by the Secretary of the Company, an opinion of
outside counsel for such successor entity stating that such assumption agreement
is a valid, binding and enforceable agreement of such successor entity (subject
to customary exceptions).
ARTICLE III
Covenants of Parent
Section 3.01 Covenant Regarding Voting Shares of Acquiror Common
Stock. Parent covenants that it shall cause Cendant Car Rental, Inc. (or any
transferee of the shares of Acquiror Common Stock held by Cendant Car Rental,
Inc.) to vote all shares of Acquiror Common Stock held by it in favor of the
NYSE Approval and the Class B Shareholder Approval.
Section 3.02 Covenant Regarding Sales of the Series A Preferred
Stock. Parent covenants that it shall provide Acquiror with not less than 10
days' prior written notice of any proposed sale, in a single transaction or a
series of related transactions, by Parent or its affiliates of all or
substantially all of the shares of (a) Series A Preferred Stock and (b) Class B
Common Stock that were issued upon the conversion of the Series A Preferred
Stock, that are beneficially owned collectively by Parent and its affiliates.
ARTICLE IV
Miscellaneous
Section 4.01 Legends. Parent agrees that substantially the following
legend shall be placed on the certificates representing any Shares owned by it:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF ("TRANSFERRED") EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE
STOCKHOLDERS' AGREEMENT DATED AS OF JUNE 30, 1999, A COPY OF SUCH
STOCKHOLDERS' AGREEMENT IS ON FILE WITH THE SECRETARY OF AVIS FLEET
LEASING AND MANAGEMENT CORPORATION AND IS AVAILABLE WITHOUT CHARGE UPON
WRITTEN RE QUEST THEREFOR. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE PROVISIONS OF THE
AFORESAID AGREEMENT.
From and after the date of this Agreement, any reference in any legend on any
certificate representing any Shares to the Stockholders' Agreement shall be
deemed for all purposes to refer to this Agreement.
Section 4.02 Specific Performance. Each of Parent, the Company and
Acquiror acknowledges and agrees that in the event of any breach of this
Agreement, the non-breaching party or parties would be irreparably harmed and
could not be made whole by monetary damages. Each of Parent, the Company and
Acquiror hereby agrees that in addition to any other remedy to which they may be
entitled at law or in equity, they shall be entitled to compel specific
performance of this Agreement in any action instituted in any court of the
United States or any state thereof having subject matter jurisdiction for such
action.
Section 4.03 Heading. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
Section 4.04 Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, conditions or undertakings with respect
to the subject matter hereof, other than those expressly set forth or referred
to herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof.
Section 4.05 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of change of address shall be effective only
upon receipt thereof). Any such notice shall be effective upon receipt, if
personally delivered or telecopied, or one day after delivery to a courier for
next-day delivery.
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If to Acquiror or the Company, to:
Avis Rent A Car, Inc.
000 Xxx Xxxxxxx Xxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, Esq.
with a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxx, Esq.
If to Parent, to:
PHH Corporation
c/o Cendant Corporation
0 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx Chuff, Esquire
Section 4.06 Applicable Law. The substantive laws of the State of
New York shall govern the interpretation, validity and performance of the terms
of this Agreement, regardless of the law that might be applied under applicable
principles of conflicts of laws. THE PARTIES HERETO WAIVE THEIR RIGHT TO A JURY
TRIAL WITH RESPECT TO DISPUTES HEREUNDER; ALL SUCH DISPUTES SHALL BE SETTLED BY
BINDING ARBITRATION PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION IN NEW YORK, NEW YORK AND THE ORDER OF SUCH ARBITRATORS SHALL BE
FINAL AND BINDING ON ALL PARTIES HERETO AND MAY BE ENTERED AS A JUDGMENT IN A
COURT HAVING JURISDICTION OVER THE PARTIES.
Section 4.07 Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
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enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
Section 4.08 Successors; Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, successors and assigns, including, without limitation, any
Person to which Parent shall Transfer the Shares or the shares of Class B Common
Stock issued upon conversion of the Shares.
Section 4.09 Amendments. This Agreement may not be amended, modified
or supplemented unless such modification is in writing and signed by Acquiror
and Parent.
Section 4.10 Waiver. Any waiver (express or implied) of any default
or breach of this Agreement shall not constitute a waiver of any other or
subsequent default or breach.
Section 4.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same Agreement.
Section 4.12 Termination. Unless earlier terminated, this Agreement
shall terminate on the earliest of: (a) the date upon which all of the Shares
are redeemed by the Company; and (b) the tenth anniversary of the date hereof,
provided that Section 3.02 shall continue in effect so long as Parent and/or any
affiliate of Parent beneficially owns Shares or shares of Class B Common Stock
issued upon the conversion of the Shares.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned hereby agree to be bound by the
terms and provisions of this Agreement as of the date first above written.
AVIS FLEET LEASING AND
MANAGEMENT CORPORATION
By:_____________________________
Name:
Title:
AVIS RENT A CAR, INC.
By:______________________________
Name:
Title:
PHH CORPORATION
By:______________________________
Name:
Title:
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