Avis Budget Group and I.D. Systems have announced they have agreed to deploy I.D. Systems’ proprietary wireless vehicle management systems in Avis Budget’s vehicle rental fleet.

The agreement follows an extensive pilot program in which the technology was successfully deployed in both traditional airport locations and corporate campuses.

The first phase of expanded system deployment, which will put I.D. Systems’ technology into more than 25,000 Avis Budget vehicles and facilities in portions of the United States and Canada, is valued at $14 million over five years.

The exclusive agreement also provides Avis Budget an option to expand system deployment across its global fleet of vehicles which, if fully exercised, is valued at substantially more.

“This agreement is the culmination of a ten-year technology collaboration between I.D. Systems and Avis Budget,” said Jeffrey Jagid, chairman of I.D. Systems.

“We believe our wireless rental fleet management technology has the potential to revolutionize the car rental industry and are proud to be partnering with Avis Budget, a global leader in this industry.”

I.D. Systems’ wireless in-vehicle management system permits two-way data communications between a vehicle and various car rental operating systems.

Combined with Avis Budget’s existing technologies, I.D. Systems’ services will enable Avis Budget to rent and check-in vehicles virtually, all with the use of a smartphone.

In addition, the system has the potential to drive further productivity by automating the vehicle data collection process and streamlining billing.

“We are excited to be deploying I.D. Systems’ wireless technology,” said Ronald Nelson, Avis Budget Group chairman.

“We believe the expanded deployment of virtually enabled vehicles will enable us to drive incremental business with our established base of corporate customers and to place additional cars in local-market settings, driving revenue growth.”

In connection with the agreement, Avis Budget purchased one million shares of I.D. Systems common stock at a price of $4.60 per share, based on the 20-day average share price as of August 22nd, 2011.

In addition, Avis Budget received warrants to purchase up to 600,000 additional shares of I.D. Systems common stock at a price of $10.00 per share, with 100,000 warrants vesting at contract signing and 500,000 warrants vesting if and when Avis Budget exercises its option to substantially expand system deployment.

The agreement also provides Avis Budget with a limited term of exclusivity for the use of I.D. Systems’ technology in the car and truck rental industry, with an extended term granted automatically upon Avis Budget’s exercise of such option.