5,000,000 Shares of Common Stock
AVIS RENT A CAR, INC.
FORM OF UNDERWRITING AGREEMENT
March __, 1998
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC
as Representatives of the
several Underwriters named
in Schedule I annexed hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Ladies and Gentlemen:
Avis Rent A Car, Inc., a Delaware corporation (the "Company"), and
Cendant Corporation, a Delaware corporation ("Cendant"), hereby confirm their
agreements with you as follows:
1. Underwriters. The term "Underwriters", as used herein, refers
collectively to you and the other underwriters named in Schedule I hereto,
for whom you are acting as representatives. Except as may be expressly set
forth below, any reference to you in this Underwriting Agreement shall be
solely in your capacity as representatives of the Underwriters, and the
Company and Cendant shall be entitled to act and rely upon any statement,
request, notice, consent, waiver or agreement purportedly on behalf of any
Underwriter made or given by Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("Bear, ▇▇▇▇▇▇▇").
2. Description of Stock. The Company proposes to sell to the
Underwriters an aggregate of 5,000,000 shares (the "Firm Shares") of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company, upon the
terms and subject to the conditions set forth herein. Cendant proposes to grant
to the Underwriters the option to purchase from Cendant, for the sole purpose of
covering over-allotments, if any, in connection with the sale of the Firm
Shares, an aggregate of up to 750,000 additional shares (the "Additional
Shares") of Common Stock upon the terms and subject to the conditions set forth
herein and for
the purposes set forth in Section 4(b) hereof. The Firm Shares and the
Additional Shares are hereinafter referred to collectively as the "Shares."
3. Representations and Warranties.
A. The Company represents and warrants to, and agrees with, each
Underwriter that:
(a) The Company meets the requirements for the use of a Registration
Statement on Form S-1 under the Securities Act of 1933 (the "Act"), and has
prepared and filed with the Securities and Exchange Commission (the
"Commission"), pursuant to the Act and the rules and regulations
promulgated by the Commission thereunder (the "Regulations"), a
registration statement on Form S-1 (File No. 333-46737) relating to the
Shares and may have filed one or more amendments thereto, including a
preliminary prospectus relating to the offering of the Shares. The Company
next proposes to file with the Commission a further amendment to the
registration statement, including therein a final prospectus, necessary to
permit the registration statement to become effective or, if no amendment
is required for that purpose, then promptly following the effectiveness of
the registration statement, the Company proposes to file with the
Commission, in accordance with Rules 430A and 424(b)(1) or Rule 424(b)(4)
of the Regulations, a final prospectus with respect to the offering of the
Shares, the final prospectus so filed in either case to include all Rule
430A Information (as hereinafter defined) and to conform, in content and
form, to the last printer's proof thereof furnished to and approved by you
immediately prior to such filing. As used in this Agreement, (i)
"Effective Date" means the date that the registration statement hereinabove
referred to, or the most recent post-effective amendment thereto, if any,
is declared effective by the Commission, (ii) "Registration Statement"
means such registration statement as last amended prior to the time the
same was declared effective by the Commission, including all exhibits and
schedules thereto and all Rule 430A Information deemed to be included
therein at the Effective Date pursuant to Rule 430A of the Regulations,
(iii) "Rule 430A Information" means information with respect to the Shares
and the public offering thereof permitted, pursuant to the provisions of
paragraph (a) of Rule 430A of the Regulations, to be omitted from the form
of prospectus included in the Registration Statement at the time it is
declared effective by the Commission, (iv) "Prospectus"
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means the form of final prospectus relating to the Shares first filed with
the Commission pursuant to Rule 424(b) of the Regulations or, if no filing
pursuant to Rule 424(b) is required, the form of final prospectus included
in the Registration Statement at the Effective Date and (v) "Preliminary
Prospectus" means any preliminary prospectus (as described in Rule 430 of
the Regulations) with respect to the Shares that omits Rule 430A
Information.
(b) The Registration Statement conforms and on the Effective Date
will conform, and the Prospectus on the date thereof and on the date first
filed with the Commission pursuant to Rule 424(b) of the Regulations (if
required) will conform, in all material respects with the applicable
requirements of the Act and the Regulations. On the Effective Date, the
date the Prospectus is first filed with the Commission pursuant to Rule
424(b) of the Regulations (if required), at all times subsequent thereto to
and including the Closing Date (as defined in Section 4(a)(ii) hereof) and,
if later, the Additional Closing Date (as defined in Section 4(b)(ii)
hereof), when any post-effective amendment to the Registration Statement
becomes effective or any supplement to the Prospectus is filed with the
Commission, and during such longer period as the Prospectus may be required
to be delivered under the Act in connection with sales of Shares by the
Underwriters or a dealer, the Registration Statement and the Prospectus (as
amended or supplemented if the Company shall have filed with the Commission
an amendment or supplement thereto) did not and will not contain an untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements made therein
(in the case of the Prospectus, in light of the circumstances under which
they were made) not misleading. No order preventing or suspending the use
of any Preliminary Prospectus has been issued by the Commission, and when
any Preliminary Prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or an amendment thereof or
pursuant to Rule 424(a) of the Regulations) and when any amendment thereof
or supplement thereto was first filed with the Commission, such Preliminary
Prospectus and any amendments thereof and supplements thereto conformed in
all material respects with the applicable requirements of the Act and the
Regulations thereunder and did not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were
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made, not misleading. No representation and warranty, however, is made in
this subsection 3.A(b) by the Company with respect to written information
contained in or omitted from the Registration Statement, the Prospectus,
any Preliminary Prospectus, or any amendment or supplement in reliance upon
and in conformity with written information with respect to the Underwriters
and the plan of distribution of the Shares furnished to the Company on
behalf of any Underwriter by Bear, ▇▇▇▇▇▇▇ expressly for use in connection
with the preparation thereof.
(c) Each contract, agreement, instrument, lease, license or other
item required to be described in the Registration Statement or the
Prospectus or filed as an exhibit to the Registration Statement has been so
described or filed, as the case may be.
(d) Deloitte & Touche LLP, whose separate report appears in the
Prospectus, are independent public accountants with respect to the Company
and Ernst & Young LLP, whose separate report appears in the Prospectus, are
independent public accountants with respect to First ▇▇▇▇ Line Corporation
("First ▇▇▇▇ Line"), in each case as required by and within the meaning of
the Act and the Regulations. The consolidated financial statements and
schedules (including the related notes) of the Company, its subsidiaries
and their predecessors (the "Company Financials") included in the
Registration Statement or any Preliminary Prospectus, or to be included in
the Prospectus fairly present the consolidated financial position, results
of operations and cash flows of the Company, its subsidiaries and their
predecessors and the other information purported to be shown therein at the
respective dates and for the respective periods to which they apply. The
Company Financials have been prepared in accordance with generally accepted
accounting principles as in effect in the United States ("US GAAP")
consistently applied throughout the periods involved, and are, in all
material respects, in accordance with the books and records of the Company,
its subsidiaries and their predecessors, as the case may be. The
consolidated financial statements and schedules (including the related
notes) of First ▇▇▇▇ Line and its subsidiaries (the "First ▇▇▇▇ Line
Financials") included in the Registration Statement or any Preliminary
Prospectus, or to be included in the Prospectus fairly present the
consolidated financial position, results of operations and cash flows of
First ▇▇▇▇ Line and its subsidiaries and the other information purported to
be shown therein at the
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respective dates and for the respective periods to which they apply. The
First ▇▇▇▇ Line Financials have been prepared in accordance with US GAAP
consistently applied throughout the periods involved, and are, in all
material respects, in accordance with the books and records of First ▇▇▇▇
Line and its subsidiaries, as the case may be. The "pro forma" financial
information included in the Registration Statement or any Preliminary
Prospectus, or to be included in the Prospectus, fairly present the
information purported to be shown therein at the respective dates thereof
and for the respective periods covered thereby and all adjustments have
been properly applied. The assumptions in such pro forma financial
information are reasonable. No other financial statements are required by
Form S-1 or otherwise to be included in the Registration Statement or the
Prospectus other than those included therein.
(e) Subsequent to the respective dates as of which information is
given in the Registration Statement, except as set forth in the
Registration Statement or as may be set forth in the Prospectus, there has
not been any material adverse change in the business, properties,
operations, condition (financial or other) or results of operations of the
Company and the subsidiaries (as defined below) taken as a whole, whether
or not arising from transactions in the ordinary course of business, and
since the date of the latest balance sheet of the Company included in the
Registration Statement, and except as described in the Registration
Statement or as may be described in the Prospectus, (i) neither the Company
nor any of its subsidiaries (A) has incurred or undertaken any liabilities
or obligations, direct or contingent, that are, individually or in the
aggregate, material to the Company and its subsidiaries taken as a whole,
or (B) entered into any transaction not in the ordinary course of business
that is material to the Company and its subsidiaries taken as a whole; and
(ii) the Company has not declared or paid any dividend on or made any
distribution of or with respect to any shares of its capital stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of its or its subsidiaries' capital stock. As
used in this Agreement, the term "subsidiary" means any corporation,
partnership, joint venture, association, company, business trust or other
entity in which the Company or First ▇▇▇▇ Line, as the case may be,
directly or indirectly (i) beneficially owns or controls a majority of the
outstanding voting securities
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having by the terms thereof ordinary voting power to elect a majority of
the board of directors (or other body fulfilling a substantially similar
function) of such entity (irrespective of whether or not at the time any
class or classes of such voting securities shall have or might have voting
power by reason of the happening of any contingency) or (ii) has the
authority or ability to control the policies of such entity (including, but
without limitation thereto, any partnership of which the Company or First
▇▇▇▇ Line, as the case may be, or a subsidiary is a general partner or owns
or has the right to obtain a majority of limited partnership interests and
any joint venture in which the Company or First ▇▇▇▇ Line, as the case may
be, or a subsidiary has liability similar to the liability of a general
partner of a partnership or owns or has the right to obtain a majority of
the joint venture interests). For the avoidance of doubt, First ▇▇▇▇ Line
is a subsidiary of the Company for all purposes of this agreement.
(f) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Underwriting
Agreement and to issue, sell and deliver the Shares in accordance with the
terms and conditions hereof. This Underwriting Agreement has been duly and
validly authorized, executed and delivered by the Company and is a legal
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity), and
except insofar as rights to indemnification and contribution contained
herein may be limited by federal or state securities laws or related public
policy.
(g) The Company's execution and delivery of, and its performance of
its obligations under, this Underwriting Agreement and the consummation of
the transactions contemplated hereby, will not (i) conflict with or result
in a breach of any of the terms and provisions of, or constitute a default
under (or an event that with notice or lapse of time, or both, would
constitute a default under) or require approval or consent under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries
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pursuant to the terms of (A) any agreement, contract, indenture, mortgage,
lease, license, arrangement or understanding to which the Company or any of
its subsidiaries is a party, or to which any of its properties is subject,
that is material to the Company and the subsidiaries taken as a whole
(hereafter, collectively, "Material Contracts") (except for those
conflicts, breaches or defaults for which consent or approval has been
obtained by the Company prior to the date hereof, and copies evidencing
such consent or approval have been provided to Bear, ▇▇▇▇▇▇▇) or (B) any
governmental franchise, license or permit heretofore issued to the Company
or any of its subsidiaries that is material to the Company and its
subsidiaries taken as a whole (hereafter, collectively, "Material
Permits"), (ii) violate or conflict with any provision of the certificate
of incorporation, by-laws or similar governing instruments of the Company
or any of its subsidiaries listed on Schedule II hereto (the "Material
Subsidiaries") or (iii) violate or conflict with any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental
or regulatory agency or body having jurisdiction over the Company or any
Material Subsidiary or any of its respective properties or assets, except
for those violations or conflicts, that, individually or in the aggregate,
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole (hereafter, a "Material Adverse Effect").
(h) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its subsidiaries or any of its respective properties or
assets is required for the Company's execution and delivery of, and its
performance of its obligations under, this Underwriting Agreement, and the
consummation of the transactions contemplated hereby, except the
registration of the Shares under the Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the authorization of the Shares for
listing on the New York Stock Exchange (the "NYSE") and such filings and
registrations as may be required under state securities or "Blue Sky" laws
in connection with the purchase and distribution of the Shares by the
Underwriters.
(i) All of the currently outstanding shares of capital stock of the
Company, and all of the outstanding shares of capital stock (or similar
interests) of each of its
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subsidiaries, have been duly and validly authorized and issued, are fully
paid and nonassessable and were not issued in violation of or subject to
any preemptive rights. The shares of Common Stock of the Company to be
outstanding on the Closing Date, including the Shares, have been duly
authorized and, when issued (and, in the case of the Shares, delivered and
sold in accordance with the terms of the Underwriting Agreement) will be
validly issued, fully paid and nonassessable, and will not have been issued
in violation of or be subject to any preemptive rights. Upon delivery of
and payment for the Shares in accordance with the Underwriting Agreement,
the Underwriters will receive valid title to those of the Shares to be
purchased by them from the Company, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements and
voting trusts. The Company has, as of the date hereof, and will have, as
of the Closing Date and the Additional Closing Date, if any, an authorized
and outstanding capitalization as set forth in the Registration Statement
and as shall be set forth in the Prospectus, both on an historical basis
and as adjusted to give effect to the offering of the Shares. The
Company's capital stock conforms to the description thereof set forth in
the Registration Statement and as shall be set forth in the Prospectus.
The Company owns directly or indirectly such percentage of the outstanding
capital stock (or similar interests) of each of its subsidiaries as is set
forth opposite the name of such subsidiary in Schedule III hereto, free and
clear of all claims, liens, security interests, pledges, charges,
encumbrances, stockholders agreements and voting trusts, except as
otherwise described in said Schedule III.
(j) There is no commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling for the issuance of, any
shares of capital stock (or similar interests) of the Company or of any of
its subsidiaries or any security or other instrument that by its terms is
convertible into, exchangeable for or evidencing the right to purchase
capital stock (or similar interests) of the Company or such subsidiary,
except as described in the Registration Statement and as shall be described
in the Prospectus.
(k) The Company has no subsidiaries other than those listed in
Schedule III hereto. Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in good standing
under the laws of its
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jurisdictions of incorporation. Each of the Company and the Material
Subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to
be so qualified or in good standing that will not in the aggregate have a
Material Adverse Effect. Each of the Company and the Material Subsidiaries
has all requisite corporate power and authority, and all necessary
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties
and conduct its business as now being conducted and as described in the
Registration Statement and as shall be described in the Prospectus (except
for those the absence of which, individually or in the aggregate, would not
have a Material Adverse Effect), and no such consent, approval,
authorization, order, registration, qualification, license or permit
contains a materially burdensome restriction that is not adequately
disclosed in the Registration Statement and the Prospectus. Neither the
Company nor any Material Subsidiary has received any notice of proceedings
relating to revocation or modification of any such consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses or
permits (except for those the revocation or modification of which would not
have a Material Adverse Effect).
(l) Neither the Company nor any of its subsidiaries, nor to the
knowledge of the Company, any other party, is in violation or breach of, or
in default under (nor has an event occurred that with notice, lapse of time
or both, would constitute a default under), any Material Contract, and each
Material Contract is in full force and effect, and is the legal, valid and
binding obligation of the Company or such subsidiary, as the case may be,
and (subject to applicable bankruptcy, insolvency, and other laws affecting
the enforceability of creditors' rights generally) is enforceable as to the
Company or such subsidiary, as the case may be, in accordance with its
terms. Neither the Company nor any Material Subsidiary is in violation of
its certificate of incorporation, by-laws or similar governing instrument.
(m) There is no litigation, arbitration, claim, governmental or other
proceeding or investigation pending
9
or, to the best knowledge of the Company, threatened with respect to the
Company or any of its subsidiaries, or any of its respective operations,
businesses, properties or assets, except as described in the Registration
Statement and as shall be described in the Prospectus, that, individually
or in the aggregate, would have a Material Adverse Effect. Neither the
Company nor any Material Subsidiary is, or, to the best knowledge of the
Company, with the giving of notice or lapse of time or both would be, in
violation of or in non-compliance with the requirements of any Material
Permit or the provisions of any law, rule, regulation, order, judgment or
decree, including, without limitation, all applicable federal, state and
local laws and regulations relating to (i) zoning, land use, protection of
the environment, human health and safety or hazardous or toxic substances,
wastes, pollutants or contaminants and (ii) employee or occupational
safety, discrimination in hiring, promotion or pay of employees, employee
hours and wages or employee benefits, except for such violations or
failures of compliance that, individually or in the aggregate, would not
have a Material Adverse Effect.
(n) Except as described in the Registration Statement and as shall be
described in the Prospectus, the Company and each of its subsidiaries have
(i) good and marketable title to all real and personal properties owned by
them, free and clear of all liens, security interests, pledges, charges,
encumbrances and mortgages, and (ii) valid, subsisting and enforceable
leases for all real and personal properties leased by them, in each case,
subject to such exceptions as, individually or in the aggregate, do not
have and are not reasonably likely to have a Material Adverse Effect. No
real property owned, leased, licensed or used by the Company or by a
Material Subsidiary lies in an area that is, or to the best knowledge of
the Company will be, subject to zoning, use or building code restrictions
that would prohibit, and no state of facts relating to the actions or
inaction of another person or entity or his, her or its ownership, leasing,
licensing or use of any real or personal property exists that would
prevent, the continued effective ownership, leasing, licensing or use of
such real property in the business of the Company or such Material
Subsidiary as presently conducted or as the Prospectus indicates are
contemplated to be conducted, subject to such exceptions as, individually
or in the aggregate, do not have and are not reasonably likely to have a
Material Adverse Effect.
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(o) The Company, directly or through one or more of its subsidiaries,
owns or has the right under license to use all patents, patent rights,
licenses, inventions, copyrights, trademarks, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), service marks and trade
names (collectively, "Intellectual Property") necessary to conduct its
business as now conducted and proposed to be conducted as disclosed in the
Registration Statement and as shall be disclosed in the Prospectus.
Neither the Company nor any of its subsidiaries has received notice of
infringement of or conflict with the asserted rights of others with respect
to any Intellectual Property. To the best knowledge of the Company, there
is no infringement by others of any Intellectual Property of the Company or
any of its subsidiaries that has had or may in the future have a Material
Adverse Effect.
(p) To the Company's best knowledge, neither the Company or any of
its subsidiaries, nor any director, officer or employee of the Company or
any such subsidiary has, directly or indirectly, used any corporate funds
for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback, or other unlawful
payment.
(q) Except as set forth in the Registration Statement, no person or
entity has the right, by contract or otherwise, to require registration
under the Act of shares of capital stock or other securities of the Company
or any of its subsidiaries solely because of the filing or effectiveness of
the Registration Statement and the consummation of the transactions
contemplated by the Underwriting Agreement.
(r) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Regulations) has taken or will take, directly
or indirectly, prior to the termination of the offering of the Shares
contemplated by this Underwriting Agreement, any action designed to
stabilize or manipulate the price of the Common Stock, or that might
reasonably be expected to cause or result in stabilization or manipulation
of the price of the Common Stock.
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(s) Neither the Company nor any of its subsidiaries is, or intends to
conduct its business in such a manner that it would become, and after
giving effect to the offering and sale of the Shares and the application of
the proceeds thereof as described in the Prospectus, neither the Company
nor any subsidiary will be, an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(t) Except as may be set forth in the Prospectus, neither the Company
nor Cendant has incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Underwriting
Agreement.
(u) The Company and each of its subsidiaries maintain systems of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with US GAAP and
to maintain accountability for assets; (iii) the access to the respective
assets of the Company and each such subsidiary, as the case may be, is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(v) Other than as disclosed in the Registration Statement and as
shall be disclosed in the Prospectus, no labor dispute with the employees
of the Company or any of its subsidiaries exists or, to the best knowledge
of the Company, is imminent that, individually or in the aggregate, is or
is reasonably likely to have a Material Adverse Effect, and the Company is
not aware of any existing or imminent labor disturbance by the employees of
any of its principal suppliers or contractors that reasonably can be
expected to have a Material Adverse Effect.
(w) (i) All United States Federal income tax returns of the Company
and each of its subsidiaries required by law to be filed have been filed
and all taxes shown by such returns or otherwise assessed that are due and
payable have been paid, except assessments against which appeals have been
or will be promptly taken and (ii) the Company and its
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subsidiaries have filed all other tax returns that are required to have
been filed by them pursuant to the applicable laws of all other
jurisdictions, except, as to each of the foregoing clauses (i) and (ii),
insofar as the failure to file such returns, individually or in the
aggregate, would not have a Material Adverse Effect, and the Company and
its subsidiaries have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Company or any such subsidiary,
except for such taxes, if any, as are being contested in good faith and as
to which adequate reserves have been provided in accordance with US GAAP.
The charges, accruals and reserves on the consolidated books of the Company
in respect of any tax liability for any years not finally determined are
adequate to meet any assessments or re-assessments for additional tax for
any years not finally determined, except to the extent of any inadequacy
that would not have a Material Adverse Effect.
(x) Each of the Company and its subsidiaries is insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor any of
its subsidiaries has any reason to believe that it will not be able to
renew its existing insurance coverage from similar insurers as may be
necessary to continue its business.
(y) Except as disclosed in the Registration Statement and as shall be
disclosed in the Prospectus, there are no business relationships or related
party transactions of the nature described in Item 404 of Regulation S-K of
the Commission involving the Company or any other persons referred to in
such Item 404, except for such transactions that would be considered
immaterial under such Item 404.
(z) All information provided to the Underwriters and Underwriters'
counsel related to the proposed asset purchase of the ▇▇▇▇▇ Leasing
Company, Inc. ("▇▇▇▇▇") car rental business, including the Avis System
franchises for the cities of Austin, Fort Worth and San Antonio, and the
counties of Dallas and Tarrant, Texas, for approximately $85.0 million in
cash plus the refinancing of fleet-related indebtedness which totaled
approximately $117.0 million at January 31, 1998 is accurate in all
material respects. The Purchase Agreement, dated February 20, 1998,
between the Company and ▇▇▇▇▇, providing for such purchase, subject to
13
the terms and conditions therein, is in full force and effect.
B. Cendant represents and warrants to each Underwriter and the
Company as follows:
(a) Cendant has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(b) Cendant's execution and delivery of, and its performance of its
obligations under, this Underwriting Agreement and the consummation of the
transactions contemplated hereby, will not (i) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default under
(or an event that with notice or lapse of time, or both, would constitute a
default under) or require approval or consent under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of Cendant pursuant to the terms of (A) any agreement, contract,
indenture, mortgage, lease, license, arrangement or understanding to which
Cendant is a party, or to which any of its properties is subject, that is
material to Cendant (except for those conflicts, breaches or defaults for
which consent or approval has been obtained by Cendant prior to the date
hereof, and copies evidencing such consent or approval have been provided
to Bear, ▇▇▇▇▇▇▇) or (B) any governmental franchise, license or permit
heretofore issued to Cendant that is material to Cendant, (ii) violate or
conflict with any provision of the certificate of incorporation, by-laws or
similar governing instruments of Cendant or (iii) violate or conflict with
any judgment, decree, order, statute, rule or regulation of any court or
any public, governmental or regulatory agency or body having jurisdiction
over Cendant or any of its respective properties or assets, except for
those violations or conflicts, that, individually or in the aggregate,
would not have a material adverse effect on Cendant.
(c) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over Cendant
or any of its respective properties or assets is required for Cendant's
execution and delivery of, and its performance of its obligations under,
this Underwriting Agreement, and the consummation of the transactions
contemplated hereby.
14
(d) Cendant has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Underwriting
Agreement and to sell and deliver the Shares in accordance with the terms
and conditions hereof. This Underwriting Agreement has been duly and
validly authorized, executed and delivered by Cendant and is a legal and
binding obligation of Cendant, enforceable against Cendant in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity), and
except insofar as rights to indemnification and contribution contained
herein may be limited by federal or state securities laws or related public
policy.
(e) Cendant has, and on the Additional Closing Date will have, good
and valid title to those of the Shares to be sold by it pursuant to this
Underwriting Agreement, free and clear of all liens, adverse claims,
security interests, restrictions on transfer, shareholders' agreements and
voting trusts, and, upon the delivery of and payment for such Shares as
herein contemplated, each Underwriter will receive good and valid title to
those of such Shares as are purchased by it from Cendant, free and clear of
all liens, adverse claims, security interests, restrictions on transfer,
shareholders' agreements and voting trusts.
(f) Neither Cendant nor any of its officers, directors or affiliates
(as defined in the Regulations) has taken or will take, directly or
indirectly, prior to the termination of the offering of the Shares
contemplated by this Underwriting Agreement, any action designed to
stabilize or manipulate the price of the Common Stock, or that might
reasonably be expected to cause or result in stabilization or manipulation
of the price of the Common Stock.
(g) On the Effective Date, the date the Prospectus is first filed
with the Commission pursuant to Rule 424(b) of the Regulations (if
required), at all times subsequent thereto to and including the Closing
Date (as defined in Section 4(a)(ii) hereof) and, if later, the Additional
Closing Date (as defined in Section 4(b)(ii) hereof), when any
post-effective amendment to the Registration Statement becomes effective
or any supplement to the Prospectus is
15
filed with the Commission, and during such longer period as the Prospectus
may be required to be delivered under the Act in connection with sales of
Shares by the Underwriters or a dealer, the Registration Statement and the
Prospectus (as amended or supplemented if the Company shall have filed with
the Commission an amendment or supplement thereto) as relate to Cendant did
not and will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements made therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading.
4. Purchase, Sale and Delivery of the Shares.
(a) (i) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to issue and sell to each of the Underwriters an
aggregate of 5,000,000 shares of Common Stock, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto, all
at a purchase price per share of $______ (the "Purchase Price"). Subject to
Section 12, the number of Firm Shares to be purchased from the Company by each
Underwriter (as adjusted by Bear, ▇▇▇▇▇▇▇ to eliminate fractions) shall be
determined by multiplying the aggregate number of Firm Shares to be sold by the
Company, as set forth above by a fraction (A) the numerator of which is the
total number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto and (B) the denominator of which is the total number of Firm
Shares.
(ii) Delivery of the Firm Shares and payment of the Purchase Price
therefor shall be made at the offices of Bear, ▇▇▇▇▇▇▇ & Co. Inc. at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other location in the New York City
metropolitan area as Bear, ▇▇▇▇▇▇▇ shall determine and advise the Company upon
at least two full business days' (as defined in Section 18 hereof) notice in
writing. Such delivery and payment shall be made at 10:00 A.M., New York City
time, on the third full business day following the determination of the Purchase
Price, or at such other time as may be agreed upon by Bear, ▇▇▇▇▇▇▇ and the
Company. The time and date of such delivery and payment are herein called the
"Closing Date." Delivery of the Firm Shares shall be made to or upon the order
of Bear, ▇▇▇▇▇▇▇, for the respective accounts of the Underwriters, against
payment to the Company of the aggregate Purchase Price therefor by wire transfer
16
of same day funds to the account of the Company designated in writing to Bear,
▇▇▇▇▇▇▇ at least two business days prior to the Closing Date.
(iii) Certificates for the Firm Shares shall be registered in such name
or names and in such authorized denominations as Bear, ▇▇▇▇▇▇▇ may request in
writing at least two full business days prior to the Closing Date, provided
that, if so specified by Bear, ▇▇▇▇▇▇▇, the Firm Shares may be represented by a
global certificate registered in the name of Cede & Co., as nominee of the
Depositary Trust Company ("Cede"). Bear, ▇▇▇▇▇▇▇ shall be permitted to examine
and package such certificates for delivery at least one full business day prior
to the Closing Date, unless the Firm Shares are to be represented by a global
certificate.
(b) (i) Cendant hereby grants to the Underwriters an option (the
"Option") to purchase from Cendant the Additional Shares at the Purchase Price,
for the sole purpose of covering over-allotments, if any, in the offering of the
Firm Shares by the Underwriters. The Option shall be exercisable by the
Underwriters on one occasion only, at any time before the expiration of 30 days
from the date of the Prospectus, for the purchase of all or part of the
Additional Shares, such exercise to be made by notice, given by Bear, ▇▇▇▇▇▇▇ to
the Company in the manner specified in Section 14 hereof, which notice shall set
forth the aggregate number of Additional Shares with respect to which the Option
is being exercised, the denominations and the name or names in which
certificates evidencing the Additional Shares so purchased are to be registered,
and the date and time of delivery of such Additional Shares, which date may be
at or subsequent to the Closing Date and shall not be less than two nor more
than ten days after such notice. Subject to Section 12, the aggregate number of
Additional Shares so purchased from the Company by each Underwriter (as adjusted
by Bear, ▇▇▇▇▇▇▇ to eliminate fractions) shall be determined by multiplying the
total number of such Additional Shares to be sold by the Company by a fraction
(A) the numerator of which is the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto and (B) the denominator of which
is the total number of Firm Shares.
(ii) Delivery of the Additional Shares so purchased and payment of the
Purchase Price therefor shall be made at the offices of Bear, ▇▇▇▇▇▇▇ & Co. Inc.
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other location in the New
York City metropolitan area as Bear, ▇▇▇▇▇▇▇ shall determine and advise the
Company and Cendant upon at least two full business days' notice
17
in writing. Such delivery and payment shall be made at 10:00 A.M., New York
City time, on the date designated in such notice or at such other time and date
as may be agreed upon by Bear, ▇▇▇▇▇▇▇, the Company and Cendant. The time and
date of such delivery and payment are herein called the "Additional Closing
Date." Delivery of the Additional Shares shall be made to or upon the order of
Bear, ▇▇▇▇▇▇▇, for the respective accounts of the Underwriters, against payment
to Cendant of the aggregate Purchase Price therefor by wire transfer of same day
funds to the account of Cendant designated in writing to Bear, ▇▇▇▇▇▇▇ at least
two business days prior to the Additional Closing Date.
(iii) Certificates for the Additional Shares purchased by the
Underwriters, when so delivered, shall be registered in such name or names and
in such authorized denominations as Bear, ▇▇▇▇▇▇▇ shall have requested in the
notice of exercise of the Option, provided that, if so specified therein, such
Additional Shares may be represented by a global certificate registered in the
name of Cede. Bear, ▇▇▇▇▇▇▇ shall be permitted to examine and package such
certificates for delivery at least one full business day prior to the Additional
Closing Date, unless the Additional Shares are to be represented by a global
certificate.
(c) The Underwriters shall not be obligated to purchase any Firm
Shares from the Company except upon tender to the Underwriters by the Company of
all of the Firm Shares and the Underwriters shall not be obligated to purchase
any Additional Shares from Cendant except upon tender to the Underwriters by
Cendant of all of the Additional Shares specified in the notice of exercise of
the Option. The Company shall not be obligated to sell or deliver any Firm
Shares, and Cendant shall not be obligated to sell and deliver any Additional
Shares, except in each case upon tender of payment by the Underwriters for all
the Firm Shares or the Additional Shares, as the case may be, agreed to be
purchased by the Underwriters hereunder.
5. Offering. The Company has been advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Underwriting
Agreement have become effective as in your judgment is advisable. The Company
is further advised by you that the Shares are to be offered to the public
initially at a price of $_____ per share and to certain dealers selected by you
at a price that represents a concession not in excess of $_____ per share, and
that any Underwriter may allow, and such dealers may reallow, a further
concession, not in excess of $_____ a share, to any Underwriter or to certain
other dealers,
18
and that after the initial offering of the Shares, the public offering price and
such concessions may be changed by you.
6. Covenants of the Company and Cendant.
A. The Company covenants and agrees with each Underwriter that:
(a) The Company shall use its best efforts to cause the Registration
Statement to become effective as promptly as possible and to maintain it in
effect. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Regulations, or filing of the Prospectus with
the Commission is otherwise required under Rule 424(b) of the Regulations,
the Company shall file the Prospectus, properly completed, with the
Commission pursuant to Rule 424(b) of the Regulations within the time
period therein prescribed and shall provide evidence satisfactory to you of
such timely filing. The Company shall promptly advise you (and, if
requested, confirm such advice in writing), (i) when the Registration
Statement or any post-effective amendment thereto has become effective,
(ii) of the initiation or threatening of any proceedings for, or receipt by
the Company of any notice with respect to, the suspension of the
qualification of the Shares for sale in any jurisdiction or the issuance by
the Commission of any order suspending the effectiveness of the
Registration Statement and (iii) of receipt by the Company or any
representative of or attorney for the Company of any other communications
from the Commission relating to the Company, the Registration Statement,
any Preliminary Prospectus, the Prospectus or the transactions contemplated
by this Underwriting Agreement. The Company shall make every reasonable
effort to prevent the issuance of an order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto and, if
any such order is issued, to obtain its lifting as soon as possible. The
Company shall not file any amendment to the Registration Statement or any
amendment of or supplement to the Prospectus before or after the Effective
Date to which you shall reasonably object after being timely furnished in
advance a copy thereof unless the Company shall conclude, upon the advice
of counsel, that any such amendment must be filed at a time prior to
obtaining such consent.
(b) Within the time during which the Prospectus is required to be
delivered under the Act, the Company shall
19
comply with all requirements imposed upon it by the Act, as now or
hereafter amended, and by the Regulations, as from time to time in force,
so far as necessary to permit the continuance of sales of or dealings in
the Shares as contemplated by the provisions hereof and by the Prospectus.
If, during such period, any event shall occur as a result of which the
Prospectus as then amended or supplemented include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading, or if it
shall be necessary at any time to amend the Registration Statement or
supplement the Prospectus to comply with the Act and the Regulations, the
Company shall notify you promptly and prepare and file with the Commission
an appropriate post-effective amendment to the Registration Statement or
supplement to each Prospectus (in form and substance reasonably
satisfactory to you) that will correct such statement or omission and shall
use its best efforts to have any such post-effective amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company shall promptly deliver to you two manually-signed
copies of the Registration Statement, including exhibits and all amendments
thereto, and to those persons (including your counsel) whom you identify to
the Company, such number of conformed copies of the Registration Statement,
with exhibits, each Preliminary Prospectus, the Prospectus and all
amendments of and supplements to such documents, if any, as you may
reasonably request.
(d) The Company shall cooperate with the Underwriters and Weil,
Gotshal & ▇▇▇▇▇▇ LLP ("Underwriters' Counsel") in connection with their
efforts to qualify or register the Shares for sale under the state
securities or "Blue Sky" laws of such jurisdictions as you shall request,
shall execute such applications and documents and furnish such information
as reasonably may be required for such purpose and shall comply with such
laws so as to continue such registrations and qualifications in effect for
so long as may be required to complete the distribution of the Shares;
provided, however, that in connection therewith the Company shall not be
required to (i) qualify as a foreign corporation in any jurisdiction in
which it is not so qualified as of the date hereof, (ii) file a consent to
service of process in any jurisdiction in any action other than one arising
out of the offering or sale of the Shares
20
in such jurisdiction or (iii) become subject to taxation in any
jurisdiction in which it is not now so subject.
(e) The Company shall make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you, in such
numbers as you reasonably may request for distribution to the Underwriters,
as soon as practicable but in no event later than 45 days after the end of
its fiscal quarter in which the first anniversary date of the Effective
Date occurs, an earnings statement, covering a period of at least twelve
consecutive full calendar months commencing after the effective date of the
Registration Statement, that satisfies the provisions of Section 11(a) of
the Act and Rule 158 of the Regulations.
(f) During a period of 90 days from the date of this Underwriting
Agreement, the Company shall not, without the prior written consent of
Bear, ▇▇▇▇▇▇▇, (i) issue, sell, offer or agree to sell, or otherwise
dispose of, directly or indirectly, any shares of its capital stock (or any
securities convertible into, exercisable for or exchangeable for shares of
its capital stock) other than the Company's issuance and sale of Shares in
accordance with this Underwriting Agreement and the issuance of up to such
number of shares of Common Stock (or options exercisable for up to such
number of shares) reserved for issuance pursuant to the Company's Stock
Option Plan as specified in the Registration Statement, or (ii) acquire, or
agree or commit to acquire or publicly announce its intention to acquire,
directly or through a subsidiary, assets or securities of any other person,
firm or corporation in a transaction or series of related transactions that
would be material to the Company and its subsidiaries, taken as a whole.
(g) During the three years following the Effective Date, the Company
shall furnish to Bear, ▇▇▇▇▇▇▇, in such quantity as Bear, ▇▇▇▇▇▇▇ may
reasonably request for distribution to the Underwriters, copies of (i) all
reports of the Company to its stockholders, (ii) all reports, financial
statements, and proxy or information statements filed by the Company with
the Commission or any national securities exchange and (iii) such other
information concerning the Company and its affairs as Bear, ▇▇▇▇▇▇▇ may
reasonably request from time to time.
(h) The Company shall apply the proceeds from the sale of the Shares
to be sold by it under this Underwriting Agreement in the manner set forth
under "Use of Proceeds" in
21
the Prospectus. The Company shall take such steps as shall be necessary to
ensure that neither the Company nor any subsidiary shall become an
"investment company" or a company "controlled" by an "investment company"
within the meaning of such terms under the Investment Company Act.
(i) The Company shall take all actions necessary to comply with the
rules and regulations of the NYSE in order to maintain the listing of the
Shares on the NYSE.
(j) The Company shall comply with all registration, filing and
reporting requirements of the Exchange Act and the rules and regulations
thereunder, which may from time to time be applicable to the Company.
(k) The Company shall comply with all provisions of all undertakings
contained in Part II of the Registration Statement.
(l) Prior to the Closing Date and, if the Option is exercised, until
the Additional Closing Date, the Company shall issue no press release or
other communication or hold any press conference with respect to the
offering of the Shares, or the financial condition, results of operations,
operations, business properties, assets, liabilities, or prospects of the
Company, without your prior consent.
(m) The Purchase Agreement, dated February 20, 1998, between the
Company and ▇▇▇▇▇, shall not be modified in any manner that could be
adverse to the Company.
B. Cendant covenants and agrees with each Underwriter and the
Company as follows:
(a) During a period of 90 days from the date of this Underwriting
Agreement, Cendant shall not, without the prior written consent of Bear,
▇▇▇▇▇▇▇, (i) issue, sell, offer or agree to sell, or otherwise dispose of,
directly or indirectly, any shares of the Common Stock (or any securities
convertible into, exercisable for or exchangeable for shares of the Common
Stock) other than Cendant's sale of Shares in accordance with this
Underwriting Agreement, or (ii) acquire, or agree or commit to acquire or
publicly announce its intention to acquire, directly or through a
subsidiary, assets or securities of any other person, firm or corporation
in a transaction or series of related transactions that would be material
to Cendant.
22
(b) Within the time during which the Prospectus is required to be
delivered under the Act, Cendant shall comply with all requirements imposed
upon it by the Act, as now or hereafter amended, and by the Regulations, as
from time to time in force, so far as necessary to permit the continuance
of sales of or dealings in the Shares as contemplated by the provisions
hereof and by the Prospectus. If, during such period, any event shall
occur relating to Cendant as a result of which the Prospectus as then
amended or supplemented includes any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary at
any time to amend the Registration Statement or supplement the Prospectus
to comply with the Act and the Regulations, Cendant shall notify you and
the Company promptly.
(c) Prior to the termination of the offering of the Shares
contemplated by this Underwriting Agreement, Cendant will not take,
directly or indirectly, any action designed to stabilize or manipulate the
market price of the Common Stock, or that might reasonably be expected to
cause or result in stabilization or manipulation of the market price of the
Common Stock.
7. Payment of Expenses. Whether or not the transactions
contemplated by this Underwriting Agreement are consummated or this Underwriting
Agreement is terminated, and subject to Section 13(d) hereof, the Company agrees
to pay all costs and expenses incident to the performance of the obligations of
the Company and Cendant under this Underwriting Agreement, including those in
connection with (i) preparing, printing, duplicating, filing and distributing
the Registration Statement (including all amendments thereof and exhibits
thereto), any Preliminary Prospectus, the Prospectus and any supplements
thereto, this Underwriting Agreement and all related agreements, and all other
documents relating to the public offering of the Shares, (ii) the issuance,
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the registration and qualification if any,
of the Shares under state securities laws, or where applicable the obtaining of
exemptions therefrom, including the reasonable fees and disbursements of
Underwriters' Counsel in connection therewith, (iv) the listing of the Shares on
the NYSE, (v) the review of the terms of the public offering of the Shares by
the National Association of Securities Dealers, Inc. (the "NASD") and the
reasonable fees and disbursements of Underwriters' Counsel in
23
connection therewith, (vi) the printing of certificates representing the Shares
and (vii) the cost and charges of any transfer agent and registrar for the
Shares.
8. Conditions of the Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Shares, as provided herein,
shall be subject to (i) the accuracy of the representations and warranties of
the Company and Cendant herein contained, as of the date hereof, as of the
Closing Date and, with respect to the Additional Shares, the accuracy of the
representations and warranties of the Company and Cendant as of the Additional
Closing Date, (ii) the absence from any certificates, opinions, written
statements or letters furnished pursuant to this Section 8 to you or to
Underwriters' Counsel of any qualification or limitation not previously approved
in writing by you, (iii) the performance by the Company and Cendant of their
obligations hereunder and (iv) the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., New York City time, on the date of this Underwriting
Agreement or at such later time and date as shall have been consented to in
writing by Bear, ▇▇▇▇▇▇▇. All post-effective amendments to the
Registration Statement shall have become effective. If the Company shall
have relied upon Rule 430A of the Regulations, the Prospectus shall have
been filed with the Commission in a timely fashion in accordance with
Section 6.A(a) hereof. All filings required by Rule 424 of the Regulations
shall have been made and no such filings shall have been made without your
consent. No stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof shall have been issued by
the Commission or any state securities commission and no proceedings
therefor shall have been initiated or threatened by the Commission or any
state securities commission.
(b) At the Closing Date (and, with respect to the Additional Shares,
the Additional Closing Date), you shall have received the written opinion
of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Company and
Cendant, dated the date of its delivery, addressed to the Underwriters, and
in form and scope satisfactory to Underwriters' Counsel, to the effect
that:
(i) Each of the Company, Cendant and the domestic subsidiaries
listed in Schedule II hereto (the "Material Domestic Subsidiaries")
(x) has been duly
24
organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and (y) has all
requisite corporate power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits of and from all public,
regulatory or governmental agencies and bodies, to own, lease and
license its respective properties and conduct its business as now
being conducted and as described in the Registration Statement and the
Prospectus, except for those the absence of which, individually or in
the aggregate, would not have a Material Adverse Effect.
(ii) The authorized capital stock of the Company is as set forth
in the Prospectus under the caption "Capitalization". All of the
outstanding shares of such capital stock have been duly and validly
authorized and issued, are fully paid and nonassessable and were not
issued in violation of or subject to any preemptive rights. The
shares of Common Stock to be outstanding on the Closing Date,
including the Shares, have been duly authorized and when issued (and,
in the case of the Shares, delivered and sold in accordance with the
terms of this Underwriting Agreement) will be validly issued, fully
paid and nonassessable. Upon delivery of and payment for the Shares
to be sold by the Company and Cendant to each Underwriter in
accordance with this Underwriting Agreement, each Underwriter
(assuming that it acquires such Shares without notice of any adverse
claim, as such term is used in Section 8-105 of the Uniform Commercial
Code in effect in the State of New York (the "Code")) will acquire
good and marketable title to the Shares so sold and delivered to it,
free and clear of any adverse claim, as defined in Section 8-102(a)(1)
of the Code (other than those resulting from any action taken by such
Underwriter). The capital stock of the Company conforms in all
material respects to the description thereof contained in the
Registration Statement and the Prospectus.
(iii) Each of the Company and Cendant has all requisite corporate
right, power and authority to execute, deliver and perform its
obligations under this Underwriting Agreement and to issue, sell and
deliver the Shares in accordance with the terms and conditions hereof.
This Underwriting Agreement has been duly and
25
validly authorized, executed and delivered by each of the Company and
Cendant.
(iv) To the best of such counsel's knowledge, no consent,
approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any public, governmental, or
regulatory agency or body having jurisdiction over Cendant, the
Company or any Material Domestic Subsidiary or any of the Company's
respective properties or assets is required for Cendant's or the
Company's execution and delivery of, and its performance of its
obligations under, this Underwriting Agreement, and the consummation
of the transactions contemplated hereby, including, without
limitation, of the issuance, sale and delivery of the Shares, except
for (A) such as may be required under state securities or "Blue Sky"
laws in connection with the purchase and distribution of the Shares by
the Underwriters (as to which such counsel need express no opinion)
and (B) such as have been made or obtained under the Act, the Exchange
Act or the rules of the NYSE.
(v) Cendant's execution and delivery of, and its performance of
its obligations under, this Underwriting Agreement and the
consummation of the transactions contemplated hereby, do not and, when
such performance is required pursuant to the terms hereof, will not
(A) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default under (or an event that with
notice or lapse of time, or both, would constitute a default under) or
require approval or consent under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of Cendant pursuant to the terms of any agreement, contract,
indenture, mortgage, lease, license, arrangement or understanding to
which Cendant is a party, or to which any of its properties is
subject, that is material to Cendant, or any governmental franchise,
license or permit heretofore issued to Cendant that is material to
Cendant, except for those conflicts, breaches or defaults for which
consent or approval has been obtained by Cendant prior to the date
hereof, (B) violate or conflict with any provision of the certificate
of incorporation, by-laws or similar governing instruments of Cendant,
or (C) to such counsel's knowledge, violate or conflict with any
judgment, decree, order, statute, rule or regulation of
26
any court or any public, governmental or regulatory agency or body
having jurisdiction over Cendant or any of its respective properties
or assets, except, with respect to clauses (A) and (C) of this
subparagraph (v), for those violations or conflicts that, individually
or in the aggregate, would not have a material adverse effect on
Cendant.
(vi) The Registration Statement and the Prospectus (except for
the financial statements and the notes thereto, the financial
statement schedules and the other financial and accounting data
included therein, as to which no opinion need be expressed) comply as
to form in all material respects with the requirements of the Act and
the Regulations.
(vii) The Registration Statement has become effective under the
Act, and such counsel is not aware of any stop order suspending the
effectiveness of the Registration Statement and to such counsel's
knowledge no proceedings therefor have been initiated or threatened by
the Commission, and there are no other filings on the part of the
Company required by the Act or the Regulations, including those
required by Rule 424(b) of the Regulations, that to such counsel's
knowledge have not been made.
(viii) Neither the Company nor Cendant is an "investment company"
or a company "controlled" by an "investment company" as defined in the
Investment Company Act.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company and
Cendant, representatives of the independent certified public accountants of
the Company, representatives of the Underwriters and Underwriters' Counsel
at which the contents of the Registration Statement, the Prospectus and any
amendments thereof or supplements thereto and related matters were
discussed and, although such counsel has not undertaken to investigate or
verify independently and are not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus or any
amendments thereof or supplements thereto (except as to matters referred to
in the last sentence of clause (ii) above), no facts have come to such
counsel's attention which
27
lead such counsel to believe that the Registration Statement, on the
effective date thereof (or any post-effective amendment thereof as of
the date of such amendment), contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus, on the date thereof or the date of such opinion, contained
an untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no
view with respect to the financial statements and related notes, the
financial statement schedules and the other financial and accounting
data included therein).
In rendering such opinion, such counsel (i) may limit its opinions to
the corporate laws of the State of Delaware, the laws of the State of New
York and the federal laws of the United States of America, and (ii) may
rely (A) as to matters involving the application of laws other than the
laws of the State of New York and the corporate laws of the State of
Delaware and the federal laws of the United States of America, to the
extent such counsel deems proper and to the extent specified in such
opinion letter, if at all, upon a written opinion or opinions (in form and
scope reasonably satisfactory to Underwriters' Counsel) of other counsel
reasonably acceptable to Underwriters' Counsel, familiar with the
applicable laws; and (B) as to matters of fact, to the extent such counsel
may deem proper, on certificates of responsible officers of the Company and
on certificates of responsible officers of Cendant and certificates or
other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company, its subsidiaries and Cendant.
The opinion of such counsel shall specifically state that the opinion of
any such other counsel is in form and scope satisfactory to such counsel
and, in such counsel's opinion, such counsel and you are justified in
relying thereon. A copy of the opinion of any such other counsel shall be
delivered to Underwriters' Counsel.
(c) At the Closing Date (and, with respect to the Additional Shares,
the Additional Closing Date), you shall have received the written opinion
of the General Counsel of the Company, dated the date of its delivery,
addressed to
28
the Underwriters, and in form and scope satisfactory to Underwriters'
Counsel, to the effect that:
(i) Each of the Company and the Material Domestic Subsidiaries
is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties
(owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so
qualified or in good standing that will not in the aggregate have a
Material Adverse Effect. All of the issued and outstanding capital
stock (or similar interests) of each Material Domestic Subsidiary has
been duly and validly authorized and issued, is fully paid and
nonassessable and was not issued in violation of or subject to any
preemptive rights and is owned by the Company or one of its
subsidiaries, free and clear of all claims, liens, security interests,
pledges, charges, encumbrances, stockholders agreements and voting
trusts, except as otherwise described in Schedule II to this
Agreement.
(ii) The shares of Common Stock to be outstanding on the Closing
Date, including the Shares, will not have been issued in violation of
or be subject to any preemptive rights. To such counsel's knowledge,
there is no outstanding option, warrant or other right calling for the
issuance of any share of capital stock (or similar interests) of the
Company or of any of its subsidiaries or any security or other
instrument that by its terms is convertible into, exercisable for or
exchangeable for capital stock (or similar interests) of the Company
or any subsidiary, except as described in the Registration Statement
and the Prospectus.
(iii) The Company's execution and delivery of, and its performance
of its obligations under, this Underwriting Agreement and the
consummation of the transactions contemplated thereby, do not and,
when such performance is required pursuant to the terms thereof, will
not (A) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default under (or an event that with
notice or lapse of time, or both, would constitute a default under) or
require approval or consent under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to the
29
terms of any Material Contract or any Material Permit, except for
those conflicts, breaches or defaults for which consent or approval
has been obtained by the Company prior to the date hereof, (B) violate
or conflict with any provision of the certificate of incorporation,
by-laws or similar governing instruments of the Company or any
Material Domestic Subsidiary, or (C) to such counsel's knowledge,
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory
agency or body having jurisdiction over the Company or any Material
Domestic Subsidiary or any of its respective properties or assets,
except, with respect to clauses (A) and (C) of this subparagraph
(iii), for those violations or conflicts that, individually or in the
aggregate, would not have a Material Adverse Effect.
(iv) Insofar as statements in the Prospectus purport to summarize
the nature and status of litigation or the provisions of laws, rules,
regulations, orders, judgments or decrees, or the terms of any
Material Contracts or Material Permits, such statements are correct in
all material respects and are fair summaries of the matters referred
to therein.
(v) To the best of such counsel's knowledge, except as set forth
in the Registration Statement and the Prospectus, no person or entity
has the right, by contract or otherwise, to require registration under
the Act of shares of capital stock or other securities of the Company
or any of its subsidiaries solely because of the filing or
effectiveness of the Registration Statement and the consummation of
the transactions contemplated by this Underwriting Agreement.
(vi) The Shares have been duly authorized for listing on the
NYSE, subject only to official notice of issuance.
(vii) To the best of such counsel's knowledge, there is no
litigation, arbitration or governmental or other action, suit,
proceeding or investigation before any court or before or by any
public, regulatory or governmental agency or body pending or
threatened against, or involving the properties or business of, the
Company or any of its subsidiaries, that, if
30
resolved against the Company or such subsidiary, individually or, to
the extent involving related claims or issues, in the aggregate, is of
a character required to be disclosed in the Registration Statement and
the Prospectus that has not been properly disclosed therein; and to
the best of such counsel's knowledge, there is no contract or document
concerning the Company or any of its subsidiaries of a character
required to be described in the Registration Statement and the
Prospectus or to be filed as an exhibit to the Registration Statement,
that is not so described or filed.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent certified public accountants of the
Company, representatives of the Underwriters and Underwriters' Counsel at
which the contents of the Registration Statement, the Prospectus and any
amendments thereof or supplements thereto and related matters were
discussed and, although such counsel has not undertaken to investigate or
verify independently and are not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus or any
amendments thereof or supplements thereto (except as to matters referred to
in clause (iv) above), no facts have come to such counsel's attention which
lead such counsel to believe that the Registration Statement, on the
effective date thereof (or any post-effective amendment thereof as of the
date of such amendment), contained an untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, on the date thereof or the date of such opinion, contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no view with
respect to the financial statements and related notes, the financial
statement schedules and the other financial and accounting data included
therein).
In rendering such opinion, such counsel (i) may limit its opinions to
the corporate laws of the State of Delaware, the laws of the State of New
York and the federal laws of
31
the United States of America, and (ii) may rely (A) as to matters
involving the application of laws other than the laws of the State of
New York and the corporate laws of the State of Delaware and the federal
laws of the United States of America, to the extent such counsel deems
proper and to the extent specified in such opinion letter, if at all,
upon a written opinion or opinions (in form and scope reasonably
satisfactory to Underwriters' Counsel) of other counsel reasonably
acceptable to Underwriters' Counsel, familiar with the applicable laws;
and (B) as to matters of fact, to the extent such counsel may deem
proper, on certificates of responsible officers of the Company and
certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company and the
subsidiaries. The opinion of such counsel shall specifically state that
the opinion of any such other counsel is in form and scope satisfactory
to such counsel and, in such counsel's opinion, such counsel and you are
justified in relying thereon. A copy of the opinion of any such other
counsel shall be delivered to Underwriters' counsel.
(d) At the Closing Date (and, with respect to the Additional Shares,
the Additional Closing Date), you shall have received a certificate of the
Company executed by each of the Chief Executive Officer and the Chief
Financial Officer of the Company, dated the date of its delivery, to the
effect that the conditions set forth in subsection (a) of this Section 8
have been satisfied, that the representations and warranties of the Company
set forth in Section 3 hereof are true and correct as of such Closing Date
and the obligations of the Company to be performed hereunder on or prior
thereto have been duly performed.
(e) At the Closing Date (and, with respect to the Option Shares, the
Additional Closing Date), you shall have received a certificate executed by
an appropriate officer of Cendant, dated the date of its delivery, to the
effect that the representations and warranties of Cendant set forth in
Section 3 hereof are accurate and that the obligations of Cendant to be
performed hereunder on or prior to such Closing Date have been duly
performed.
(f) At the time this Underwriting Agreement is executed and at the
Closing Date (and, with respect to the Additional Shares, the Additional
Closing Date), you shall have received a letter, from Deloitte & Touche
LLP, dated
32
the date of its delivery, addressed to the Underwriters and in form and
substance reasonably satisfactory to you, to the effect that: (i) they
are independent accountants with respect to the Company within the
meaning of the Act and the Regulations; (ii) in their opinion, the
Company Financials audited by such firm and included in the Registration
Statement and the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the
applicable published rules and regulations thereunder; (iii) on the
basis of procedures (but not an audit made in accordance with generally
accepted auditing standards) consisting of a reading of the latest
available unaudited interim consolidated financial statements of the
Company and its subsidiaries, a reading of the minutes of meetings and
consents of the stockholders and boards of directors of the Company and
the subsidiaries and the committees of such boards subsequent to
December 31, 1997, inquiries of certain officials of the Company and its
subsidiaries who have responsibility for financial and accounting
matters of such companies with respect to transactions and events
subsequent to December 31, 1997, and other specified procedures and
inquiries to a date not more than five days prior to the date of such
letter, nothing has come to their attention that would cause them to
believe that: (A) the unaudited historical consolidated financial
statements of the Company, its subsidiaries and their predecessors
included in the Registration Statement and the Prospectus do not comply
as to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or that any material modification should be made to such
unaudited consolidated financial statements for them to be in conformity
with US GAAP; (B) with respect to the period subsequent to December 31,
1997 there were, as of the date of the most recent available monthly
consolidated financial data of the Company and the subsidiaries, if any,
and as of a specified date not more than five days prior to the date of
such letter, any changes in the capital stock or increases in long-term
indebtedness of the Company or any decrease in stockholders' equity of
the Company, in each case as compared with the amounts shown in the most
recent balance sheet included in the Registration Statement and the
Prospectus, except for changes or decreases that the Registration
Statement and the Prospectus disclose have occurred or may occur; (C)
the unaudited pro forma consolidated financial statements included in
the Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the
33
applicable published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of such financial statements; or (D) that during the
period from December 31, 1997 to the date of the most recent available
monthly consolidated financial data of the Company and its subsidiaries,
if any, and to a specified date not more than five days prior to the
date of such letter, there was any decrease, as compared with the
corresponding period in the prior fiscal year, in total revenues, or
total or per share net income, except for decreases that the Prospectus
discloses have occurred or may occur; and (iv) stating that they have
compared specific dollar amounts, numbers of shares, percentages of
revenues and earnings and other financial information pertaining to the
Company and its subsidiaries set forth in the Prospectus, which have
been specified by you prior to the date of this Underwriting Agreement,
to the extent that such dollar amounts, numbers, percentages and
information may be derived from the general accounting and financial
records that are subject to the internal control structure policies and
procedures of the Company's and its subsidiaries' accounting systems or
that have been derived directly from such accounting records by analysis
or computation, and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of
specified readings, inquiries, and other appropriate procedures
specified by you (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in such
letter, and found them to be in agreement.
(g) At the time this Underwriting Agreement is executed and at the
Closing Date (and, with respect to the Additional Shares, the Additional
Closing Date), you shall have received a letter, from Ernst & Young LLP,
dated the date of its delivery, addressed to the Underwriters and in form
and substance reasonably satisfactory to you, to the effect that: (i) they
are independent accountants with respect to First ▇▇▇▇ Line within the
meaning of the Act and the Regulations; (ii) in their opinion, the First
▇▇▇▇ Line Financials audited by such firm and included in the Registration
Statement and the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the applicable
published rules and regulations thereunder; (iii) on the basis of
procedures (but not an audit made in accordance with generally accepted
auditing standards) consisting of a reading of the latest available
unaudited interim consolidated financial
34
statements of First ▇▇▇▇ Line and its subsidiaries, a reading of the
minutes of meetings and consents of the stockholders and boards of
directors of First ▇▇▇▇ Line and its subsidiaries and the committees of
such boards subsequent to September 30, 1996, inquiries of certain
officials of First ▇▇▇▇ Line and its subsidiaries who have
responsibility for financial and accounting matters of such companies
with respect to transactions and events subsequent to September 30,
1996, and other specified procedures and inquiries to a date not more
than five days prior to the date of such letter, nothing has come to
their attention that would cause them to believe that: (A) the
unaudited historical condensed consolidated financial statements of
First ▇▇▇▇ Line and its subsidiaries included in the Registration
Statement and the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published rules and regulations thereunder or that any material
modification should be made to such unaudited consolidated financial
statements for them to be in conformity with US GAAP; (B) with respect
to the period subsequent to September 30, 1996 there were, as of the
date of the most recent available monthly consolidated financial data of
First ▇▇▇▇ Line and its subsidiaries, if any, and as of a specified date
not more than five days prior to the date of such letter, any changes in
the capital stock or increases in long-term indebtedness of First ▇▇▇▇
Line or any decrease in stockholders' equity of First ▇▇▇▇ Line, in each
case as compared with the amounts shown in the most recent balance sheet
included in the Registration Statement and the Prospectus, except for
changes or decreases that the Registration Statement and the Prospectus
disclose have occurred or may occur; or (C) that during the period from
September 30, 1996 to the date of the most recent available monthly
consolidated financial data of First ▇▇▇▇ Line and its subsidiaries, if
any, and to a specified date not more than five days prior to the date
of such letter, there was any decrease, as compared with the
corresponding period in the prior fiscal year, in total revenues, or
total or per share net income, except for decreases that the Prospectus
disclose have occurred or may occur; and (iv) stating that they have
compared certain financial information pertaining to First ▇▇▇▇ Line and
its subsidiaries set forth in the Prospectus, which have been specified
by you prior to the date of this Underwriting Agreement, to the extent
that such information may be derived from the general accounting and
financial records that are subject to the internal control structure
policies and procedures of First ▇▇▇▇ Line's and
35
its subsidiaries' accounting systems or that have been derived directly
from such accounting records by analysis or computation, and excluding
any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings, inquiries,
and other appropriate procedures specified by you (which procedures do
not constitute an examination in accordance with generally accepted
auditing standards) set forth in such letter, and found them to be in
agreement.
(h) All proceedings taken in connection with the sale of the Shares
as contemplated by this Underwriting Agreement shall be reasonably
satisfactory in form and substance to you and to Underwriters' Counsel, and
you shall have received from Underwriters' Counsel a written opinion, dated
as of the Closing Date and addressed to the Underwriters, with respect to
the sale of the Firm Shares, and dated as of the Additional Closing Date
with respect to the sale of the Additional Shares, and with respect to such
other matters as you reasonably may require, and the Company and Cendant
shall have furnished to Underwriters' Counsel such documents as
Underwriters' Counsel may request for the purpose of enabling Underwriters'
Counsel to pass upon such matters.
(i) The NASD, upon review of the terms of the underwriting
arrangements for the public offering of the Shares, shall have raised no
objections thereto.
(j) The Shares shall have been listed on the NYSE, subject to
official notice of issuance.
(k) Prior to the Closing Date, and with respect to the Additional
Shares, the Additional Closing Date, the Company and Cendant shall have
furnished to you such further information, certificates and documents as
you may reasonably request.
If any of the conditions specified in this Section 8 shall not have
been fulfilled when and as required by this Underwriting Agreement, or if any
of the certificates, opinions, written statements, or letters furnished to
you or to Underwriters' Counsel pursuant to this Section 8 shall not be in
all material respects reasonably satisfactory in form and substance to you
and to Underwriters' Counsel, all obligations of the Underwriters hereunder
not theretofore discharged may be canceled by you at, or at any time prior
to, the Closing Date and with respect to the Additional Shares, the
Additional Closing Date. Notice of such cancellation shall be given to the
Company
36
and Cendant in writing, or by telephone or telephonic facsimile, confirmed in
writing.
9. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation, provided that such
settlement was effected with the Company's written consent in accordance with
subsection 9(d) hereof), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact made by the Company contained in the
Registration Statement or the Prospectus or any Preliminary Prospectus, or in
any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they
were made) not misleading; provided, however, that the Company shall not be
liable under this subsection 9(a) to any Underwriter in any such case to the
extent, but only to the extent, that any such loss, liability, claim, damage
or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with information furnished to the Company (i) by or on
your behalf with respect to the Underwriters or (ii) by or on behalf of
Cendant with respect to Cendant; and provided further, that with respect to
any Preliminary Prospectus, such indemnity shall not inure to the benefit of
any Underwriter (or the benefit of any person controlling such Underwriter)
if the person asserting any such losses, liabilities, claims, damages or
expenses purchased the Shares that are the subject thereof from such
Underwriter and if such person was not sent or given a copy of the Prospectus
at or prior to confirmation of the sale of such Shares to such person in any
case where such sending or giving is required by the Act and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus. These indemnity agreements will
be
37
in addition to any liability that the Company may otherwise have to any
Underwriter or to any controlling person of such Underwriter, including under
this Underwriting Agreement.
(b) Cendant agrees to indemnify and hold harmless each
Underwriter, the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company or any Underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation, provided that such
settlement was effected with Cendant's written consent in accordance with
subsection 9(d) hereof), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact made by Cendant contained in the
Registration Statement or the Prospectus or any Preliminary Prospectus, or in
any supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they
were made) not misleading; provided, however, that Cendant shall not be
liable under this subsection 9(b) to any Underwriter in any such case to the
extent, but only to the extent, that any such loss, liability, claim, damage
or expense arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with information relating to Cendant set forth in the
Registration Statement or the Prospectus or any Preliminary Prospectus, or in
any supplement thereto or amendment thereof; provided further, that with
respect to any Preliminary Prospectus, such indemnity shall not inure to the
benefit of any Underwriter (or the benefit of any person controlling such
Underwriter) if the person asserting any such losses, liabilities, claims,
damages or expenses purchased the Shares that are the subject thereof from
such Underwriter and if such person was not sent or given a copy of the
Prospectus at or prior to confirmation of the sale of such Shares to such
person in any case where such sending or giving is required by the Act and
the untrue statement or omission of a material fact contained in such
38
Preliminary Prospectus was corrected in the Prospectus; and, provided
further, that the indemnification obligation of Cendant under this subsection
9(b) shall be limited to the actual net proceeds (before deducting expenses)
received by Cendant from the sale by Cendant of Additional Shares hereunder.
This indemnity will be in addition to any liability that Cendant otherwise
may have to the Underwriters, the Company or any other indemnified person
specified in this subsection 9(b), including under this Underwriting
Agreement.
(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the
Company, each of the officers of the Company who shall have signed the
Registration Statement, and each other person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation, provided that such
settlement was effected with such Underwriter's written consent in accordance
with subsection 9(c) hereof), joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
or the Prospectus or any Preliminary Prospectus, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading, in each case to the extent, but only to the extent, that any such
loss, liability, claim, damage or expense arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by you or on your behalf with respect to such
Underwriter expressly for use in the Registration Statement or Prospectus;
provided, however, that in no case shall such Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable
to the Shares purchased by such Underwriter hereunder. This indemnity will
be in addition to any liability that the Underwriter may otherwise have to
the Company or any such director, officer or controlling person, including
under this
39
Underwriting Agreement. The Company and Cendant acknowledge that the
statements set forth in the last paragraph of the cover page, the legend
concerning stabilization on page two of the Prospectus and the statements set
forth under the caption "Underwriting" in the Prospectus constitute the only
information furnished in writing by or on behalf of any Underwriter expressly
for use in the Registration Statement, any related Preliminary Prospectus and
the Prospectus.
(d) Promptly after receipt by an indemnified party under
subsection 9(a), 9(b) or 9(c) above of notice of the assertion of any claim,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
it from any liability that it may have under this Section 9 except to the
extent that it has been prejudiced in any material respect by such failure or
from any liability that it may have otherwise). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with
counsel satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties unless
(i) the employment of such counsel shall have been authorized in writing by
one of the indemnifying parties in connection with the defense of such
action, (ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
that are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties with respect to such different defenses), in any of which
events such fees and expenses shall be borne by the indemnifying parties.
The indemnifying party under subsection 9(a), 9(b) or 9(c) above shall only
be liable for the legal expenses of one counsel for all indemnified parties
in each jurisdiction in which any claim or action is brought; provided,
however, that the indemnifying party shall be liable for separate
40
counsel for any indemnified party in a jurisdiction, if counsel to the
indemnified parties shall have reasonably concluded that there may be
defenses available to such indemnified party that are different from or
additional to those available to one or more of the other indemnified parties
and that separate counsel for such indemnified party is prudent under the
circumstances; and provided, further, that, if indemnity is sought by any
person who controls Bear, ▇▇▇▇▇▇▇ within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, the indemnifying party shall be liable
for the reasonable fees and expenses of not more than one additional counsel
for Bear, ▇▇▇▇▇▇▇ in such capacity and all persons who control Bear, ▇▇▇▇▇▇▇
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or
action effected without its written consent; provided, however, that such
written consent was not unreasonably withheld.
10. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in subsection 9(a) or
9(b) hereof is for any reason held to be unavailable from the Company or
Cendant or is insufficient to hold harmless a party indemnified thereunder,
the Company, Cendant and the Underwriters shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated
by such indemnification provisions (including any investigation, legal and
other expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but
after deducting in the case of losses, claims, damages, liabilities and
expenses suffered by the Company and Cendant, any contribution received by
the Company or Cendant from persons, other than one or more of the
Underwriters, who may also be liable for contribution, including persons who
control the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, officers of the Company who signed the
Registration Statement and directors of the Company) to which the Company,
Cendant and one or more of the Underwriters may be subject, in such
proportions as are appropriate to reflect the relative benefits received by
the Company and Cendant, on the one hand, and
41
the Underwriters, on the other hand, from the offering of the Shares or, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 9 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault
of the Company and Cendant, on the one hand, and the Underwriters, on the
other hand, in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and Cendant, on the one hand, and the Underwriters, on the other
hand, shall be deemed to be in the same proportion as (x) the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and Cendant and (y) the
underwriting discounts received by the Underwriters, respectively, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and Cendant, on the one hand, and of the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or Cendant, on the one hand, or the
Underwriters, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, Cendant and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 10 were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to above. The
Underwriters' obligations in this Section 10 to contribute are several and
not joint. Notwithstanding the provisions of this Section 10, (i) in no case
shall any Underwriter be required to contribute any amount in excess of the
amount by which the aggregate public offering price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or such omission or alleged omission
and (ii) no person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 10, (i) each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act shall have the same rights to contribution as such Underwriter and (ii)
each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company. Any
party entitled to contribution shall, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect
of which a claim for contribution may be made against another party or
42
parties under this Section 10, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 10 or
otherwise. No party shall be liable for contribution with respect to any
action or claim settled without its written consent; provided, however, that
such written consent was not unreasonably withheld.
11. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Underwriters,
the Company and Cendant contained in this Underwriting Agreement, including
without limitation the agreements contained in Sections 5, 6 and 7 hereof,
the indemnity agreements contained in Section 9 hereof and the contribution
agreements contained in Section 10 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Underwriters or any controlling person of any Underwriter or by or on behalf
of the Company, any of its officers and directors or Cendant or any
controlling person thereof, and shall survive delivery of the Shares to and
payment for the Shares by the Underwriters. The representations contained in
Section 3 hereof and the agreements contained in this Section 11 and Sections
5, 6, 7, 9, 10 and 13(d) hereof shall survive the termination of this
Underwriting Agreement including pursuant to Section 12 or 13 hereof;
provided, however, that if this Underwriting Agreement is terminated pursuant
to Section 12 or 13 hereof or if for any reason the purchase of the Shares by
the Underwriters as contemplated hereunder is not consummated, the agreements
contained in Sections 5 and 6 hereof shall not survive.
12. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and
if the Firm Shares or Additional Shares with respect to which such default
relates do not (after giving effect to arrangements, if any, made pursuant to
subsection 12(b) below) exceed in the aggregate 10% of the number of shares
of Firm Shares or Additional Shares, as the case may be, that all
Underwriters have agreed to purchase hereunder, then such Firm Shares or
Additional Shares to which the default relates shall be purchased by the
non-defaulting Underwriters in proportion to the respective proportions that
the numbers of Firm Shares set forth opposite their respective names in
Schedule I hereto bear to the
43
aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters.
(b) If such default relates to more than 10% of the Firm Shares or
Additional Shares, as the case may be, you may, in your discretion, arrange
for another party or parties (including any non-defaulting Underwriter or
Underwriters who so agree) to purchase such Firm Shares or Additional Shares,
as the case may be, to which such default relates on the terms contained
herein. If within five (5) calendar days after such a default you do not
arrange for the purchase of the Firm Shares or Additional Shares, as the case
may be, to which such default relates as provided in this Section 12, this
Underwriting Agreement (or, in the case of a default with respect to the
Additional Shares, the obligations of the Underwriters to purchase and of the
Company to sell the Additional Shares) shall thereupon terminate, without
liability on the part of the Company and Cendant with respect thereto (except
in each case as provided in Sections 7, 9(a) and 10 hereof) or the several
non-defaulting Underwriters (except as provided in Sections 9(b) and 10
hereof), but nothing in this Underwriting Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if any, to
the other several Underwriters and the Company and Cendant for damages
occasioned by its or their default hereunder.
(c) If the Firm Shares or Additional Shares to which the default
relates are to be purchased by the non-defaulting Underwriters, or are to be
purchased by another party or parties as aforesaid, you or the Company shall
have the right to postpone the Closing Date or Additional Closing Date, as
the case may be, for a period not exceeding five (5) business days, in order
to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and
the Company agrees to file promptly any amendment or supplement to the
Registration Statement or the Prospectus that, in the opinion of
Underwriters' Counsel, may thereby be made necessary or advisable. The term
"Underwriter" as used in this Underwriting Agreement shall include any party
substituted under this Section 12 with like effect as if it had originally
been a party to this Underwriting Agreement with respect to such Firm Shares
and Additional Shares.
13. Effective Date of Underwriting Agreement; Termination.
(a) This Underwriting Agreement shall become effective upon the
later of (i) when you and the Company shall have
44
received notification of the effectiveness of the Registration Statement and
(ii) the execution and delivery of this Underwriting Agreement by the parties
hereto. Until this Underwriting Agreement becomes effective as aforesaid,
this Underwriting Agreement may be terminated by the Company by notifying you
and Cendant or by you by notifying the Company and Cendant without any
liability of any party to any party hereunder. Notwithstanding the
foregoing, the provisions of this Section 13 and of Sections 6, 9, 10 and 11
hereof shall at all times be in full force and effect.
(b) This Underwriting Agreement and the obligations of the
Underwriters hereunder may be terminated by you by written notice to the
Company and Cendant at any time at or prior to the Closing Date (and, with
respect to the Additional Shares, the Additional Closing Date), without
liability (other than with respect to Sections 9 and 10) on the part of any
Underwriter to the Company or Cendant if, on or prior to such date, (i) the
Company or Cendant shall have failed, refused or been unable to perform in
any material respect any agreement on the part of the Company or Cendant to
be performed hereunder, (ii) any other condition to the obligations of the
Underwriters set forth in Section 8 hereof is not fulfilled when and as
required in any material respect, (iii) trading in securities generally on
the NYSE or the American Stock Exchange or in the over-the-counter market
shall have been suspended or materially limited, or minimum prices shall have
been established on either exchange or such market by the Commission, or by
either exchange or other regulatory body or governmental authority having
jurisdiction, (iv) a general banking moratorium shall have been declared by
Federal or New York State authorities, (v) there shall have occurred any
outbreak or escalation of armed hostilities involving the United States on or
after the date hereof, or if there has been a declaration by the United
States of a national emergency or war, the effect of which shall be, in your
judgment, to make it inadvisable or impracticable to proceed with
45
the sale and delivery of the Shares on the terms and in the manner
contemplated in the Prospectus, (vi) in your reasonable opinion any material
adverse change shall have occurred since the respective dates as of which
information is given in the Registration Statement or the Prospectus
affecting the business, prospects, condition (financial or other) or results
of operations of the Company and its subsidiaries taken as a whole, whether
or not arising in the ordinary course of business, other than as set forth in
the Prospectus or contemplated thereby, (vii) there shall have occurred such
a material adverse change in the financial markets in the United States such
as, in your judgment, makes it inadvisable or impracticable to proceed with
the sale and delivery of the Shares on the terms and in the manner
contemplated in the Prospectus, or (viii) there shall have been any
enactment, proposal, publication, decree or other promulgation of any foreign
or United States federal or state statute, regulation, rule or order of any
court or other governmental authority that would, in your reasonable
judgment, make it inadvisable or impracticable to proceed with the sale and
delivery of the Shares on the terms and in the manner contemplated in the
Prospectus. Your right to terminate this Underwriting Agreement will not be
waived or otherwise relinquished by failure to give notice of termination
prior to the time that the event giving rise to the right to terminate shall
have ceased to exist, provided that notice is given prior to the Closing Date
(and, with respect to the Additional Shares, the Additional Closing Date).
(c) Any notice of termination pursuant to this Section 13 shall be
by telephone or telephonic facsimile, confirmed in writing by letter.
(d) If this Underwriting Agreement shall be terminated pursuant to
any of the provisions hereof (otherwise than pursuant to notification by you
as provided in subsection 13(a) or 13(b) hereof), or if the sale of the
Shares provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth herein is not satisfied or because
of any refusal, inability or failure on the part of the Company or Cendant to
perform any agreement herein or to comply with any provision hereof (other
than by reason of a default of the Underwriters), the Company agrees, subject
to demand by you, to reimburse the Underwriters for all reasonable
out-of-pocket expenses (including the reasonable fees and expenses of
Underwriters' Counsel), incurred by the Underwriters in connection herewith.
14. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to
any one or more of the Underwriters, shall be hand delivered or faxed to each
such Underwriter in care of Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Finance Department (Fax No.
▇▇▇-▇▇▇-▇▇▇▇); and if sent to the Company or Cendant, shall be hand delivered
or faxed to the Company or Cendant at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Secretary (Fax No. ▇▇▇-▇▇▇-▇▇▇▇).
46
15. Counterparts. This Underwriting Agreement may be executed in
any number of counterparts, each of which shall be an original but all of
which together shall constitute one instrument.
16. Parties. This Underwriting Agreement shall inure solely to
the benefit of, and shall be binding upon, each of the Underwriters, the
Company and Cendant, and the controlling persons, directors, officers,
employees and agents referred to in Sections 9 and 10 hereof, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Underwriting Agreement or any provision
herein contained. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Shares from the Underwriters.
17. Construction. This Underwriting Agreement shall be construed
in accordance with the laws of the State of New York, but without regard to
principles of conflicts of laws.
18. Definition of Business Day. For the purposes of this
Underwriting Agreement, "business day" means any day on which the NYSE is
open for trading.
47
If the foregoing correctly sets forth the complete agreement
between the Underwriters, on the one hand, and the Company and Cendant, on
the other hand, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
AVIS RENT A CAR, INC.
By:
---------------------------------------
Name:
Title:
CENDANT CORPORATION
By:
---------------------------------------
Name:
Title:
Accepted as of the date first
above written.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC
as Representatives of the several
Underwriters named in Schedule I
annexed hereto.
By: BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By:
-----------------------------
Name:
Title:
48
SCHEDULE I
Number of
Firm Shares
to Be
Name of Underwriter Purchased
------------------- -----------
Bear, ▇▇▇▇▇▇▇ & Co. Inc. ..................................
▇▇▇▇▇▇ Brothers Inc. ......................................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ........
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC .....................
TOTAL ....................... 5,000,000
-----------
-----------
SCHEDULE II
MATERIAL SUBSIDIARIES
JURISDICTION OF
NAME INCORPORATION
---- ---------------
Avis Rent A Car System, Inc. Delaware
SCHEDULE III
SUBSIDIARIES OF THE COMPANY
(100% owned unless otherwise indicated)
Name Jurisdiction
---- ------------
Avis Rent A Car System, Inc. Delaware
Avis International, Ltd. Delaware
Avis Management Pty. Limited Australia
We Try Harder Pty. Limited Australia
Chaconne Pty. Limited Australia
W.T.H. Pty. Limited
Australia
Auto Accident Consultants
Pty. Limited
Australia
W.T.H. Fleet Leasing Pty. Limited Australia
Avis Services Pty. Ltd. Australia
Avis Management Services, Ltd. Delaware
Arbitra S.A.
Argentina
Avis Caribbean, Limited Delaware
Avis Rent A Car de
Puerto Rico, Inc.
Puerto Rico
Virgin Islands Enterprises, Inc. Virgin Islands
Avis Asia and Pacific, Limited Delaware
Avis Rent A Car Limited New Zealand
Altra Auto Rental Limited New Zealand
WTH Canada, Inc.
Canada
Aviscar Inc.
Canada
Avis Services Canada, Inc. Canada
Avis Rent A Car (Hong Kong) Ltd. Hong Kong
West Indies Car Rental Limited
(49% owned)
Jamaica
Avis Automoveis De Aluguel Ltda. Brazil
Avis Location de Veiculos Ltda. Brazil
1
Avis Enterprises, Inc. f/k/a
Avis Leasing Corporation Delaware
Avis Service, Inc.
Delaware
Avis Lube, Inc.
Delaware
Pathfinder Insurance Company Colorado
PF Claims Management, Ltd. Delaware
Avis Leasing Corporation Delaware
Zam, Inc.
West Virginia
Global Excess & Reinsurance Ltd. Bermuda
Constellation Reinsurance Company
Limited
Barbados
We Try Harder Japan Co., Ltd. Japan
Servicios Avis S.A.
Mexico
Avis Rent A Car Limited Fiji
Avis Rent A Car Sdn. Bhd. Malaysia
Avis Rent A Car Sdn. Bhd. Singapore
Avis Rent A Car Limited Vanuatu
First ▇▇▇▇ Line Corporation Delaware
First ▇▇▇▇ Line West Corporation Delaware
Grand Rent A Car Corp. California
AESOP Leasing L.P.
(99% owned as limited partner) Delaware
AESOP Funding II L.L.C.
(indirectly 97% owned through
AESOP Leasing L.P.) Delaware
Reserve Claims Management Co.
f/k/a Avis Leasing
International, Ltd. (ownership
shared with ▇▇▇▇▇ ▇▇▇▇▇) Delaware
2
