Exhibit 4.1
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK TO BE ISSUED UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT (AS DEFINED BELOW) OR ANY
STATE SECURITIES OR "BLUE SKY" LAWS, AND THE HOLDER OF THIS WARRANT REPRESENTS
AND WARRANTS THAT THIS WARRANT HAS BEEN, AND THE SHARES OF COMMON STOCK TO BE
ISSUED UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO, OR FOR RELEASE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. NO SALE,
ASSIGNMENT, TRANSFER, GIFT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF SUCH
WARRANT OR SHARES MAY BE MADE (i) EXCEPT IN COMPLIANCE WITH ALL APPLICABLE STATE
LAWS AND (ii) UNLESS (A) SUCH WARRANT OR SHARES ARE COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) AN EXEMPTION FROM SUCH A
REGISTRATION IS AVAILABLE.
WARRANT TO PURCHASE SHARES
OF
COMMON STOCK
OF
PRECISION AUTO CARE, INC.
Warrant No. 2002-01
THIS IS TO CERTIFY THAT, FOR VALUE RECEIVED, Desarollo Integrado, S.A. de
C.V. is entitled, subject to the terms set forth below, to purchase from
Precision Auto Care, Inc. (hereinafter with its successors called the
"Company"), a Virginia corporation, all or any part of the duly authorized,
validly issued, fully paid and non-assessable shares of the Company's common
stock, $0.01 par value (the "Common Stock"), as comprise 4,047,336 Units (as
defined and adjusted below) at the Purchase Price as set forth below. A "Unit"
shall consist initially of one share of Common Stock of the Company as such
stock is constituted on the date of this Warrant, however, the number of shares
of Common Stock comprising a Unit shall be subject to adjustment from time to
time as set forth herein.
1. Issuance. This Warrant is issued to Desarollo Integrado, S.A. de C.V.,
or registered assigns (the "Holder") by the Company.
2. Exchange Agreement. This Warrant is issued by the Company to Holder
pursuant to that certain Exchange Agreement dated October 30, 2002 (the
"Exchange Agreement").
3. Purchase Price; Number of Shares. Subject to the terms and conditions
hereinafter set forth, the Holder is entitled upon surrender of this Warrant
with the subscription form annexed hereto duly executed, at the office of the
Company, or such other office as the Company shall notify the Holder of in
writing, to purchase from the Company at a price per Unit of $0.44 (the
"Purchase Price") 4,047,336 Units, which shall become exercisable as follows:
(i) as of December 31, 2003, 2,469,600 Units shall become exercisable and (ii)
as of December 31,
2004, the remaining 1,577,736 Units shall become exercisable and, when
exercised, the shares underlying these Units will be fully-paid and
non-assessable shares of Common Stock of the Company; provided, the foregoing
notwithstanding, unless waived in writing by the Holder, all of the Units shall
become immediately exercisable by the Holder if any Triggering Event (defined
below) occurs. A "Triggering Event" shall be deemed to have occurred if: (i) the
Company's board of directors adopts a plan of merger or share exchange or a
proposed transaction involving the sale of all of substantially all of the
Company's assets (each, an "Extraordinary Transaction") and proposes to submit
such Extraordinary Transaction to the Company's shareholders for approval, or
(ii) there is a Change of Control (defined below). A "Change of Control" shall
mean: any "Person" or "group" (within the meaning of Sections 13(d) and 14(d)(2)
of the Exchange Act, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of more than 50% of the total voting power of all classes of
the voting stock of the Company, unless, as a result of such transaction, the
ultimate direct or indirect ownership of the Company is substantially the same
immediately after such transaction as it was immediately prior to such
transaction. In order to provide the Holder with an opportunity to participate
in the vote on any Extraordinary Transaction, the Holder shall be given prior
written notice if the board of directors proposes to submit an Extraordinary
Transaction to the shareholders for approval and the record date set for
determining the shareholders entitled to vote on such matter shall not be
earlier than the tenth (10th) business day after the giving of such notice.
Until such time as this Warrant is exercised in full or expires, the Purchase
Price and the securities issuable upon exercise of this Warrant are also subject
to further adjustment as provided in Sections 9 and 10 below.
4. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or
by check, (ii) by the surrender by the Holder to the Company of any promissory
notes or other obligations issued by the Company, including any obligations for
a sum certain which holder requests be offset, with all such notes and
obligations so surrendered or offset being credited against the Purchase Price
in an amount equal to the principal amount thereof plus accrued interest to the
date of surrender or offset, (iii) by the delivery of a promissory note in a
commercially customary form, bearing interest at the lowest rate promulgated by
the Internal Revenue Service Code, and with a maturity of not less than two (2)
years (or on such other terms as the parties may mutually agree) or (iv) by any
combination of the foregoing.
5. Partial Exercise. This Warrant may be exercised in part, but not for
less than 1,000 Units at a time (or such lesser number of Units which may then
constitute the maximum number purchasable, such number being subject to
adjustment as provided in Sections 9 and 10 below, and the Holder shall be
entitled to receive a new warrant, which shall be dated as of the date of this
Warrant, covering the number of Units in respect of which this Warrant shall not
have been exercised.
6. Issuance; Issuance Date. As soon as practicable after the exercise of
this Warrant in full or in part, and in any event within five (5) business days
thereafter, the Company at its expense will cause to be issued in the name of
and delivered to the Holder, or as such Holder may direct, a certificate or
certificates for the number of fully-paid and non-assessable shares of Common
Stock in respect of the applicable Units to which Holder shall be entitled on
such exercise, rounded to the nearest whole number. The person or persons in
whose name or names
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any certificate representing shares of Common Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby as
at the close of business on the date this Warrant is exercised with respect to
such shares, whether or not the transfer books of the Company shall be closed.
7. Expiration Date. This Warrant shall expire at the close of business on
October 29, 2012, and shall be void thereafter.
8. Valid Issuance. The Company shall, at all times, reserve and keep
available, solely for issuance and delivery upon exercise of this Warrant, all
shares of Common Stock issuable upon exercise of this Warrant; provided,
however, Holder acknowledges that as of the date of this Warrant the number of
authorized and unissued shares of Common Stock will only permit the exercise of
this Warrant in part and the Company will use its best efforts to effect the
amendment of its Articles of Incorporation contemplated by Section 5(a) of the
Exchange Agreement and thereafter reserve all required shares; provided further,
that if this Warrant is not exercisable in full, because of the Company's
failure to effect such amendment, then Holder will have the additional rights
set forth in Section 5(c) of the Exchange Agreement. The Company covenants that
such shares as may be issued pursuant to the exercise of this Warrant will, upon
issuance, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issuance thereof.
9. Adjustment of Number of Shares Issuable Pursuant to this Warrant.
A "Unit" shall consist initially of one share of Common Stock of the
Company as such stock is constituted on the date of this Warrant. The number of
shares of Common Stock comprising a Unit shall be subject to adjustment from
time to time as follows:
(a) Effect of "Split-ups" and "Split-downs"; Stock Dividends. If at any
time or from time to time the Company shall subdivide as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock
comprising a Unit that may be purchased hereunder shall be increased
proportionately as of the effective or record date of such action. The
issuance of such a stock dividend shall be treated as a subdivision of the
whole number of shares of Common Stock outstanding immediately before the
record date for such dividend into a number of shares equal to such whole
number of shares so outstanding plus the number of shares issued as a stock
dividend. In case at any time or from time to time the Company shall
combine as a whole, by reclassification or otherwise, the number of shares
of Common Stock then outstanding into a lesser number of shares, then the
number of shares of Common Stock comprising a Unit which may be purchased
hereunder shall be reduced proportionately as of the effective date of such
action.
(b) Effect of Certain Dividends. If on any date the Company makes a
distribution to holders of its Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of its indebtedness or
assets, the number of shares of Common Stock theretofore comprising a Unit
shall be adjusted as of the close of business on said date to a number
determined by multiplying the number of shares theretofore comprising
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a Unit by a fraction, the numerator of which shall be the Current Price
(as defined herein), and the denominator of which shall be the Current
Price minus the fair market value (as determined in good faith by the
Board of Directors of the Company) of the portion of the assets or
evidences of indebtedness so to be distributed to one share of Common
Stock.
(c) Adjustment of Unit after a "Diluting Issue". If on any date on
or after the date of this Warrant, any additional shares of Common Stock
(other than (a) shares issued upon exercise of this Warrant or (b)
Excluded Securities, as hereinafter defined) shall be issued for a
consideration per share (or, in the case of any transactions contemplated
in paragraphs (2) or (3) of this Section 9(c), shall be deemed to be
issued for a Presumed Consideration per share) less than the Current
Price on the date such Common Stock was issued or deemed to have been
issued, the number of shares of Common Stock theretofore comprising a
Unit shall be adjusted as at the close of business on such date to a
number equal to the product (computed to the nearest ten thousandth of a
share) resulting from the multiplication of (i) the total number of
shares of Common Stock comprising a Unit immediately before such
adjustment by (ii) a fraction, the numerator of which is (x) the total
number of shares of Common Stock outstanding immediately before such
issue plus the number of additional shares being issued, and the
denominator of which is (y) the total number of shares of Common Stock
outstanding immediately prior to such issue plus the number of shares of
Common Stock that the aggregate consideration received (or, without
duplication, the Presumed Consideration deemed to have been received) for
the total number of additional shares so issued would purchase at the
Current Price on the date such Common Stock was issued or deemed to have
been issued, excluding from both the numerator and denominator of such
fraction shares of Common Stock issuable pursuant to exercise of this
Warrant and Excluded Securities.
For the purpose of this Section 9(c), the following provisions shall be
applicable with respect to the issuance of additional shares of Common Stock and
the computation set forth in the immediately preceding paragraph:
(1) Stock Dividends, etc. In case any additional shares of
Common Stock shall be issued as a dividend on Common Stock the
number of shares of Common Stock Comprising a Unit shall be adjusted
as provided in Section 9(a).
In case any additional shares of Common Stock shall be issued as a
dividend on any class of stock of the Company other than Common Stock, or in
case any obligations or stock convertible into or exchangeable for shares of
Common Stock (such convertible or exchangeable obligations or stock being
hereinafter called "Convertible Securities") shall be issued as a dividend on
any class of stock of the Company, such shares of Common Stock or Convertible
Securities shall be deemed to have been issued without consideration on the day
next succeeding the date for the determination of stockholders entitled to such
dividend.
(2) Rights or Options below Current Price. In case the Company
shall on or after the date of this Warrant grant any rights or
options (other than this Warrant or any rights or options that are
Excluded Securities) to subscribe for or to purchase additional
shares of Common Stock or Convertible Securities, and the Presumed
Consideration per share received and receivable by the Company for
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such additional shares under such rights or options or pursuant to the
terms of such Convertible Securities shall be less than the Current
Price in effect immediately prior to the time of the granting of such
rights or options, the maximum number of additional shares of Common
Stock issuable pursuant to such rights or options or necessary to
effect the conversion or exchange of all such Convertible Securities
shall be deemed to have been issued as of the date of the granting of
such rights or options, and the Company shall be deemed to have
received the Presumed Consideration therefor. No adjustment (except as
provided in paragraph (4) of this Section 9(c) shall be made upon the
actual issuance of Common Stock, upon the exercise of rights or
options referenced in this paragraph (2) or the conversion of
Convertible Securities referenced in this paragraph (2).
(3) Securities Convertible below Current Price. In case:
(i) the Company shall issue any Convertible Securities
(other than pursuant to the exercise or rights or options therefor in
respect of which an adjustment shall have theretofore been made under
the foregoing paragraph (2)), and
(ii) the Presumed Consideration per share for additional
shares of Common Stock issuable pursuant to the terms of such
Convertible Securities shall be less than the Current Price in effect
immediately prior to the time of the issuance of such Convertible
Securities, then the issuance of such Convertible Securities shall be
deemed to be an issuance (as of the date of issuance of such
Convertible Securities) of the maximum number of additional shares of
Common Stock necessary to effect the conversion or exchange of all
such Convertible Securities, and the Company shall be deemed to have
received the Presumed Consideration therefor as of the date of
issuance of such Convertible Securities. No further adjustment, except
as provided in paragraph (4) of this Section 9(c), shall be made upon
the actual issuance of Common Stock upon the conversion of Convertible
Securities.
(4) Superseding Adjustment of Number of Shares of Common Stock
Comprising a Unit. If, at any time after any adjustment of the shares
of Common Stock comprising a Unit shall have been made on the basis of
shares of Common Stock deemed to be issued by reason of the provisions
of the foregoing paragraphs (2) or (3) of this Section 9(c) on the
basis of the granting of certain rights or options or the issuance of
certain Convertible Securities, or after any new adjustments of the
shares of Common Stock comprising a Unit shall have been made on the
basis of shares of Common Stock deemed to be issued by reason of the
provisions of this paragraph (4), such rights or options or the right
of conversion or exchange in any such Convertible Securities (for
which, or purchased pursuant to any rights or options for which, such
an adjustment shall previously have been made) shall expire, and a
portion of such Convertible Securities, as the case may be, shall not
have been exercised, then such previous adjustment shall be rescinded
and annulled and the shares of Common Stock that
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were deemed to have been issued by virtue of the computation made in
connection with the adjustment so rescinded and annulled, shall no
longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such rights
or options or such Convertible Securities on the basis of:
(i) treating the number of additional shares of Common
Stock, if any, theretofore actually issued pursuant to the exercise of
such expired rights or options or such expired right of conversion or
exchange, as having been issued on the date or dates of such exercise
for the consideration actually received therefor (computed as provided
in paragraph (6) of this Section 9(c), and
(ii) treating the maximum of additional shares of Common
Stock, if any, thereafter issuable pursuant to the conversion or
exchange of any Convertible Securities actually issued or
issuable pursuant to the previous exercise of such rights or
options as having been issued as of the date of the granting of
such rights or options and treating the Presumed Consideration
therefor as received as of such date:
and, on such basis, such new adjustment, if any, of the number of
shares of Common Stock comprising a Unit shall be made as may be
required by the first paragraph of this Section 9(c), which new
adjustment shall supersede the previous adjustment so rescinded
and annulled for the Warrant exercised after such new adjustment.
(5) Effect of "Split-up or "Split-down" on "deemed issued"
shares. Upon the effective or record date for any subdivision or
combination of the Common Stock of the character described in Section
(9)a, including the issuance of a stock dividend which is treated as
such as subdivision under paragraph (1) of this Section 9(c), the
number of the shares of Common Stock which are at the time deemed to
have been issued by virtue of paragraphs (2), (3) or (4) of this
Section 9(c), but have not actually been issued, shall be deemed to be
increased or decreased proportionately.
(6) Computation of Consideration and Presumed Consideration. For
the purposes of this Section 9:
(i) The consideration received by the Company upon the
actual issuance of additional shares of Common Stock shall be deemed
to be the sum of the amount of cash and the fair value of property (as
determined in good faith by resolution of the Board of Directors of
the Company as at the time of issue or "deemed issue" in the case of
the following paragraph (ii)) received or receivable by the Company as
the consideration or part of the consideration (v) at the time of
issuance of the Common Stock, (w) for the issuance of any rights or
options upon the exercise of which such Common Stock was issued, (x)
for the issuance of any rights or options to purchase Common Stock was
issued, (y) for the issuance of the Convertible Securities upon
conversion of which such Common Stock was issued,
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and (z) at the time of the actual exercise of such rights, options or
conversion privileges upon the exercise of which such Common Stock was
issued, in each case without deduction for commissions and expenses
incurred by the Company for any underwriting of, or otherwise in
connection with the issue or sale of, such rights, options,
Convertible Securities or Common Stock, but after deduction of any
sums paid by the Company in cash upon the exercise of, and pursuant
to, such rights, options or conversion privileges in respect of
fractional shares of Common Stock, except that the consideration
received by the Company upon the issuance of shares of Common Stock in
connection with a consolidation, merger, purchase of assets as a going
business or purchase of at least a majority of the voting stock of any
corporation, shall be deemed to be the Current Price then in effect:
(ii) The consideration deemed to have been received by the
Company for additional shares of Common Stock deemed to be issued
pursuant to rights, options and conversion privileges by reason of
transactions of the character described in paragraphs (2), (3) and
(4)(ii) of this Section 9(c) (herein called the "Presumed
Consideration" therefor) shall be the consideration (determined as
provided in the foregoing paragraph (i) that would be received or
receivable by the Company at or before the actual issue of such shares
of Common Stock so deemed to be issued, if all rights, options and
conversion privileges necessary to effect the actual issue of the
number of shares deemed to have been issued had been exercised
(successively exercised in the case of rights or options to purchase
Convertible Securities), and the minimum consideration received or
receivable by the Company upon such exercise had been received; all
computed without regard to the possible future effect of anti-dilution
provisions on such rights, options and/or conversion privileges.
(d) Statement of Adjustment of Unit and Current Price. Whenever the
number of shares of Common Stock comprising a Unit is adjusted pursuant to any
of the foregoing provisions of this Section 9, the Company shall promptly
prepare a written statement signed by the President of the Company, setting
forth the adjustment in the number of shares comprising a Unit purchasable
hereunder, determined as provided in this Section, and the amount of the then
effective Current Price, and in reasonable detail the facts requiring such
adjustment and the calculation thereof. Such statement shall be filed among the
permanent records of the Company and a copy thereof shall be furnished to any
holder of this Warrant without request and shall at all reasonable times during
business hours be open to inspection by such holders. The Company shall also
promptly cause a notice, stating that such an adjustment has been effected and
setting forth the increased or decreased number of shares purchasable and the
amount of the then effective Current Price, to be mailed, first-class postage
prepaid, to the holders of record of this Warrant.
(e) Determination by the Board of Directors. All determinations by
the Board of Directors of the Company under the provisions of this Section 9
shall be made in good faith with due regard to the interests of the holder of
this Warrant and the other holders of securities of the Company and in
accordance with good financial practice, and all valuations made by the Board of
Directors of the Company under the terms of this
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Section 9 must be made with due regard to any market quotations of securities
involved in, or related to, the subject of such valuation.
For all purposes of this Section 9 and this Warrant, unless the context
otherwise requires, the following terms have the following respective meanings:
"Common Stock": (i) the Company's presently authorized Common Stock as
such class exists on the date of this Warrant, (ii) securities issued upon
exercise of this Warrant, and (iii) stock of the Company of any class thereafter
authorized that ranks, or is entitled to a participation, as to assets or
dividends, substantially on a parity with Common Stock.
"Company": Precision Auto Care, Inc., a Virginia corporation, and any
other corporation assuming the Company's obligations with respect to this
Warrant pursuant to this Section 9.
"Convertible Securities": the meaning specified in Section 9(c)(1).
"Current Price": per share of Common Stock, the amount equal to the
quotient resulting from dividing (i) $0.44 by (ii) the number of shares
(including any fractional share) of Common Stock comprising a Unit on such date.
"Excluded Securities": warrants, stock options, convertible notes and
other rights to acquire Common Stock (i) issued or outstanding as of October __,
2002, or (ii) issued pursuant to the employee stock option plan (or
substantially equivalent plan) approved by the Company's Board of Directors or
its delegate, but only to the extent that the number of shares of Common Stock
issued under such stock option plan plus those shares purchasable under issued,
but unexercised options, does not exceed in the aggregate 2,000,000.
"Presumed Consideration": the meaning specified in Section 9(c)(6)(ii).
10. Conversion or Redemption of Common Stock.
(a) Should all of the Company's Common Stock be, or if outstanding would
be, at any time prior to the expiration of this Warrant or any portion thereof,
redeemed or converted into another class shares of the Company's stock, then if
there shall be any reclassification, capital reorganization or change of the
Common Stock, or any consolidation of the Company with, or merger of the Company
into, another corporation or other business organization (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of the outstanding
Common Stock), or any sale or conveyance to another corporation or other
business organization of all or substantially all of the assets of the Company,
then, as a condition of such reclassification, reorganization, change,
consolidation, merger, sale or conveyance, lawful provisions shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall thereafter have the
right to purchase, at a total price not to exceed that payable upon the exercise
of this Warrant in full, the kind
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and amount of shares of stock and other securities and property receivable
upon such reclassification, reorganization, change, consolidation, merger,
sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased by the Holder immediately prior to such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance (irrespective of any vesting dates set forth herein), and in any
such case appropriate provisions shall be made with respect to the rights
and interest of the Holder to the end that the provisions hereof (including
without limitation, provisions for the adjustment of the Purchase Price and
the number of shares issuable hereunder) shall thereafter be applicable in
relation to any shares of stock or other securities and property thereafter
deliverable upon exercise hereof.
(b) Upon any reorganization, consolidated, merger or transfer (and
any dissolution following any transfer) referred to in this Section 10,
this Warrant shall continue in full force and effect, subject to expiration
in accordance with Section 7 hereof, and the terms hereof shall be
applicable to the shares of stock and other securities and property
receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including in
the case of any such transfer, the person acquiring all or substantially
all of the properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as provided in
Section 16.
11. Grant, Issue or Sale of Options, Convertible Securities, or Rights. If
at any time or from time to time on or after the date of issuance hereof, the
Company shall grant, issue or sell any options, Convertible Securities or rights
to purchase property (the "Purchase Rights") pro rata to the record holders of
any class of Common Stock and such grants, issuances or sales do not result in
an adjustment of the Units hereunder, then the Holder shall be entitled to
acquire (within thirty (30) days after the receipt by such holder of the notice
concerning Purchase Rights to which such holder shall be entitled under Section
11) and upon the terms applicable to such Purchase Rights either:
(a) the aggregate Purchase Rights which the Holder could have
acquired if it has held the number of shares of Common Stock acquirable
upon exercise of this Warrant immediately before the grant, issuance or
sale of such Purchase Rights (irrespective of any vesting dates set forth
herein); provided that if any Purchase Rights were distributed to holders
of Common Stock without the payment of additional consideration by such
Holders, corresponding Purchase Rights shall be distributed to the
exercising Holder as soon as possible after such exercise and it shall not
be necessary for the Holder specifically to request delivery of such
rights; or
(b) in the event that any such Purchase Rights shall have expired or
shall expire prior to the end of said thirty (30) day period, the number of
shares of Common Stock or amount of property which the Holder could have
acquired upon such exercise at the time or times at which the Company
granted, issued or sold such expired Purchase Rights.
12. Fractional Shares. In no event shall any fractional share of Common
Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the
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Holder would, except as provided in this Section 12, be entitled to receive a
fractional share of Common Stock, then the Company shall issue the next higher
number of full shares of Common Stock, issuing a full share with respect to such
fractional share.
13. Notices of Record Date, Etc.
(a) Whenever the Purchase Price or number of shares purchasable
hereunder shall be adjusted, the Company shall issue a certificate signed
by its Chief Financial Officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method
by which such adjustment was calculated, and the Purchase Price and number
of shares purchasable hereunder after giving effect to such adjustment,
and shall cause a copy of such certificate to be mailed (by first class
mail, postage prepaid) to the Holder of this Warrant.
(b) In the event of: (1) any taking by the Company of a record of
the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or
to receive any other right; (2) any reclassification or recapitalization
of the capital stock of the Company, capital reorganization of the
Company, consolidation or merger involving the Company, or sale or
conveyance of all or substantially all of its assets; (3) any voluntary or
involuntary dissolution, liquidation or winding-up of the Company; or (4)
any proposed issue or grant by the Company of any shares of stock of any
class or any other securities, or any right or option to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any
other securities,
then and in each such event the Company will mail or cause to be
mailed to the Holder a notice specifying (A) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, or (B)
the date on which any such reclassification, reorganization, consolidation,
merger, sale or conveyance, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the holders of record
shall be entitled to exchange their shares for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding up, and
(C) the amount and character of any stock or other securities, or rights or
options with respect thereto, proposed to be issued or granted, the date of the
proposed issue or grant and the person or class of persons to whom such proposed
issue or grant is to be offered or made. Such notice shall be mailed at least 20
days prior to the date specified in such notice on which any such action is to
be taken.
14. Amendment. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Company and the Holder hereof.
15. Warrant Register; Transfers, Etc.
(a) The Company will maintain a register containing the names and
addresses of the registered holder or holders of the Warrant. The Holder
may change its address as shown on the warrant register by written notice
to the Company requesting such change.
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Any notice or written communication required or permitted to be given to
the Holder may be given by certified mail or delivered to the Holder at its
address as shown on the warrant register.
(b) Subject to compliance with applicable federal and state
securities laws, Holder may transfer all or part of this Warrant at any
time without notice to the Company. Upon any such transfer, the transferee
shall be deemed to be a "Holder" for the purposes of this Warrant. Upon
surrender of this Warrant to the Company, together with the assignment
hereof properly endorsed, for transfer of this Warrant as an entirety by
the Holder, the Company shall issue a new warrant of the same denomination
to the assignee. Upon surrender of this Warrant to the Company, together
with the assignment hereof properly endorsed, by the Holder for transfer
with respect to a portion of the shares of Common Stock purchasable
hereunder, the Company shall issue a new warrant to the assignee, in such
denomination as shall be requested by the Holder hereof, and shall issue to
such Holder a new warrant covering the number of shares in respect of which
this Warrant shall not have been transferred.
(c) In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and
denomination and deliver the same (i) in exchange and substitution for and
upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu
of any Warrant lost, stolen or destroyed, upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft or destruction of
such Warrant (including a reasonably detailed affidavit with respect to the
circumstances of any loss, theft or destruction) and of indemnity
reasonably satisfactory to the Company.
16. No Impairment. The Company will not, by amendment of its Articles
of Incorporation, as amended, or through any reclassification, capital
reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (a) subject to Section 8 of this
Warrant, will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of stock on the exercise of all Warrants from time to time outstanding,
and (b) will not transfer all or substantially all of its properties and assets
to any other person or permit any such person to consolidate with or merge into
the Company (if the Company is not the surviving person), unless such other
person shall expressly assume in writing and become bound by all the terms of
the Warrants. The Company stipulates that the remedies at law of the holder of
this Warrant in the event of default or threatened default by the Company in the
performance or compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced by a decree
for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
17. Holder's Representations and Warranties. By acceptance of this
Warrant, Holder represents and warrants to the Company as follows:
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(a) This Warrant and the shares of Common Stock to be issued upon
exercise hereof or conversion thereof are being acquired for Holder's own
account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Act, and the Holder has no present intention of engaging in any public
distribution thereof pursuant to a registration or exemption.
(b) Holder understands that the Warrant and the shares of Common
Stock to be issued upon exercise hereof or conversion thereof have not been
registered under the Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the
Act pursuant to Section 4(2) thereof, and that they must be held by Holder
indefinitely, and the Holder must therefore bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is
registered under the Act or is exempted from such registration. The Holder
further understands that the Shares have not been qualified under the
securities laws of any state ("State Law") by reason of their issuance in a
transaction exempt under State Law, which exemption depends upon, among
other things, the bona fide nature of the Holder's investment intent
expressed above.
(c) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
the purchase of this Warrant and the shares of Common Stock purchasable
pursuant to the terms of this Warrant and of protecting its interests in
connection therewith.
(d) The Holder is able to bear the economic risk of the purchase of
the shares of Common Stock pursuant to the terms of this Warrant.
18. Governing Law. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the
Commonwealth of Virginia.
19. Successors and Assigns. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
20. Business Days. If the last or appointed day for the taking of any
action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in Washington, D.C., then such action may
be taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
21. Notices. All notices required to be delivered by the Company to
Holder shall be made as follows:
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If to the Company: Precision Auto Care, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000
If to Holder: Desarollo Integrado, S.A de C.V.
Col. Santa Xxxxx
Monterrey, N.L. CP 64650
Attn: Xxxxxxxx Xxxxxxxx
With a copy to: Avenir Corporation
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Dated: October __, 2002
PRECISION AUTO CARE, INC.
By:____________________________________
Name: Xxxxx X. Xxxxx, Xx.,
Title: President and Chief Executive
Officer
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[FORM OF SUBSCRIPTION]
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
To: Precision Auto Care, Inc. Date:__________________________
The undersigned hereby irrevocable elects to exercise this Warrant for,
and to purchase and subscribe for, _____________ shares of Common Stock of
Precision Auto Care, Inc. covered by this Warrant. The undersigned herewith
makes payment of $_________ thereof. The certificate(s) for such shares shall be
issued in the name of the undersigned or as otherwise indicated below:
____________________________________________
Signature (must conform to name of Holder as
specified on the face of the Warrant)
____________________________________________
Name for Registration
____________________________________________
Mailing Address
Fed Tax ID #________________________________
[FORM OF ASSIGNMENT]
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received the undersigned hereby sells,
assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
Please print or typewrite name and address of Assignee and include Fed Tax
ID # of Assignee
________________________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
_______________________ its attorney to transfer the within Warrant on the books
of the within named Company with full power of substitution on the premises.
Dated:__________________
____________________________________________
Signature (must conform to name of holder as
specified on the face of the Warrant)
Signed in the Presence of:
