Avis 2008 Annual Report Download - page 33

Provisions in our certificate of incorporation and by
-laws, and of Delaware law may prevent or delay an acquisition of our company, which
could decrease the trading price of our common stock.
Our amended and restated certificate of incorporation, amended and restated by-laws and Delaware law contain provisions that are intended to
deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to
encourage prospective acquirors to negotiate with our Board of Directors rather than to attempt a hostile takeover. These provisions include,
among others:
Delaware law also imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our
outstanding common stock.
We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to
negotiate with our Board and by providing our Board with more time to assess any acquisition proposal. These provisions are not intended to
make our company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some
stockholders and could delay or prevent an acquisition that our Board determines is not in the best interests of our company and our
stockholders.
We recorded a charge for goodwill impairment in third quarter 2008, and our goodwill may be further impaired in the future, which may
require us to record an additional charge to earnings.
Under generally accepted accounting principles, we perform a goodwill impairment assessment as required, which includes, among other things,
a reconciliation of current equity market capitalization to stockholders’ equity. In third quarter 2008, our total stockholders’ equity significantly
exceeded our equity market capitalization and based on our goodwill impairment assessment, we recorded a charge of approximately $1.3 billion
for impairment of goodwill, intangible assets and the Company’s investment in Carey Holdings, Inc. During the third and fourth quarter 2008,
our stock price continued to decline. We may be required to record an additional impairment in the future including as a result of continued
reduction to our equity market capitalization or other declines in our business, which would result in a negative impact on our results of
operations.
If we do not meet the New York Stock Exchange continued listing requirements, our common stock may be delisted.
The New York Stock Exchange (“NYSE”) continued listing standards require that our common stock have a minimum average closing price of
not less than $1.00 during a consecutive 30 trading-day period. On December 17, 2008, we were notified by the NYSE that we had fallen below
this continued listing standard. Pursuant to NYSE rules, we must bring our share price and average share price back above $1.00 within six
months from the receipt of the NYSE notice, subject to possible extension. If we fail to do so, or fail to maintain compliance with other NYSE
listing requirements, the NYSE may initiate suspension and delisting procedures. A delisting of our common stock could negatively impact us
by:
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elimination of the right of our stockholders to act by written consent;
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rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings;
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the right of our Board to issue preferred stock without stockholder approval; and
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limitations on the right of stockholders to remove directors.
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reducing the liquidity and market price of our common stock;
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reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise
equity financing and access the public capital markets; or
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impairing our ability to provide equity incentives to our employees, officers or directors.