Exhibit 99.5
------------
January __, 2002
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
Ladies and Gentlemen:
In connection with your appointment as Subscription Agent in the
transaction described herein, Precision Auto Care, Inc. (the "Company"), a
Virginia corporation, hereby confirms its arrangements with you as follows:
1. Rights Offering. The Company is offering (the "Rights Offering")
---------------
to the holders of shares of its Common Stock on July __, 2001 (the "Record
Date"), the right to subscribe, at a subscription price of $___ per share of
Common Stock ("Rights"). Except as set forth herein, Rights shall cease to be
exercisable at 5:00 p.m., Eastern Daylight Time, on ________ __, 2001 (the
"Expiration Date"). One Right is being issued for each 2.5 shares of Common
Stock held on the Record Date. One Right is required to subscribe for one share
of Common Stock. Rights are evidenced by non-transferable subscription
certificates in registered form ("Subscription Certificates"). Each holder of a
Subscription Certificate who exercises the right to subscribe for all shares
that can be subscribed for with the Rights evidenced by such Subscription
Certificate (the "Basic Subscription Privilege") may have the right to subscribe
for additional shares, if any, available as a result of any unexercised Rights
(such additional subscription right being referred to hereafter as the
"Oversubscription Privilege"). The Rights Offering will be conducted in the
manner and upon the terms set forth in the Company's Prospectus dated August __,
2001 (the "Prospectus"), which is incorporated herein by reference and made a
part hereof as if set forth in full herein.
2. Appointment of Subscription Agent. You are hereby appointed as
---------------------------------
Subscription Agent to effect the Rights Offering in accordance with the
Prospectus. Each reference to you in this letter is to you in your capacity as
Subscription Agent unless the context indicates otherwise.
3. Delivery of Documents. Enclosed herewith are the following, the
---------------------
receipt of which you acknowledge by your execution hereof:
(a) a copy of the Prospectus;
(b) the form of Subscription Certificate;
(c) the form of Letter from Precision Auto to its Shareholders;
(d) the Instructions for Use of Precision Auto Subscription
Certificates;
(e) the Form of Notice of Guaranteed Delivery; and
(f) a return envelope addressed to American Stock Transfer & Trust, as
Subscription Agent.
On or before ________ __, 2001, you shall mail or cause to be mailed
to each holder of Securities at the close of business on the Record Date a
Subscription Certificate evidencing the Rights to which such holder is entitled,
a Prospectus, a Notice of Guaranteed Delivery (as defined in paragraph 7 hereof)
and an envelope addressed to you. Prior to mailing, the Company will provide
you with blank Subscription Certificates which you will prepare and issue in the
names of shareholders of record at the close of business on the Record Date and
for the number of Rights to which they are entitled. The Company will also
provide you with a sufficient number of copies of each of the documents to be
mailed with the Subscription Certificates.
4. Subscription Procedure. (a) Upon your receipt prior to 5:00
----------------------
p.m., Eastern Daylight Time, on the Expiration Date (by mail, facsimile or
delivery) as Subscription Agent of (i) any Subscription Certificate completed
and endorsed for exercise, as provided on the reverse side of the Subscription
Certificate (except as provided in paragraph 7 hereof), and (ii) payment in full
of the subscription price set forth on the cover page of the Prospectus for the
shares of Common Stock subscribed for (the "Subscription Price") in U.S. funds
(i) by certified check, bank draft or a postal, telegraphic or express money
order payable at par (without deduction for bank service charges or otherwise)
to you, "AS SUBSCRIPTION AGENT;" (ii) or wire transfer of immediately available
funds; or (iii) an alternative payment method arranged by you and approved by
the Company, you shall as soon as practicable after the Expiration Date but
after performing the procedures described in subparagraphs (b) and (c) below
(which is anticipated to be the twelfth business day thereafter) mail to the
subscriber's registered addresses on the books of the Company the shares of
Common Stock for the Rights duly exercised (pursuant to the Basic Subscription
Privilege and the Oversubscription Privilege) and furnish a list of all such
information to the Company.
(b) As soon as practicable after the Expiration Date you shall
calculate the number of shares to which each subscriber is entitled pursuant to
the Oversubscription Privilege. The Oversubscription Privilege may only be
exercised by holders who subscribe to all the shares of Common Stock that can be
subscribed for by them under the Basic Subscription Privilege. The shares of
Common Stock available for additional subscriptions will be those that have not
been subscribed and paid for pursuant to the Basic Subscription Privilege (the
"Remaining Shares"). Where there are sufficient Remaining Shares to satisfy all
additional subscriptions by holders exercising their rights under the
Oversubscription Privilege, each holder shall be allotted the number of
additional shares subscribed for. If the aggregate number of shares subscribed
for under the Oversubscription Privilege exceeds the number of Remaining Shares,
the number of
2
Remaining Shares initially allotted to each participant in the Oversubscription
Privilege shall be the lesser of (i) the number of shares which that participant
has subscribed for under the Oversubscription Privilege and (ii) the product
(disregarding fractions) obtained by multiplying the number of Remaining Shares
by a fraction of which the numerator is the number of shares subscribed for by
the participant under the Basic Subscription Privilege and the denominator is
the aggregate number of shares subscribed for under the Basic Subscription
Privilege. If after the initial allotment there are still Remaining Shares and
holders of Rights whose exercise of the Oversubscription Privilege has not been
fully satisfied, such Remaining Shares shall be allocated (one or more time as
necessary) in accordance with the foregoing principal until all available
Remaining Shares have been allocated. Any fractional share to which persons
exercising their Oversubscription Privilege would otherwise be entitled pursuant
to such allocation shall be rounded down to the next whole share.
(c) Upon calculating the number of shares to which each subscriber is
entitled pursuant to the Oversubscription Privilege and the amount overpaid, if
any, by each subscriber, you shall, as soon as practicable, (i) furnish a list
of all such information to the Company and (ii) inform holders of Subscription
Certificates who participated in the Oversubscription Privilege of the number of
additional shares, if any, allotted to them.
(d) Upon calculating the number of shares to which each subscriber is
entitled pursuant to the Oversubscription Privilege and assuming payment for the
additional shares subscribed for has been delivered, you shall mail to the
subscriber's registered address on the books of the Company the additional
shares the subscriber has been allotted as contemplated in subparagraph (a)
above. If a lesser number of shares is allotted to a subscriber under the
Oversubscription Privilege than the subscriber has tendered payment for, you
shall remit the difference to the subscriber without interest or deduction at
the same time as certificates representing the shares allotted pursuant to the
Oversubscription Privilege are mailed.
(e) You shall promptly remit, after expiration of the Rights Offering
and issuance of certificates for the shares subscribed for, all funds received
in payment of the Subscription Price under the Basic Subscription Privilege to
the Company. Funds received by you pursuant to the Oversubscription Privilege
shall be held by you in a segregated account pending allocation of shares issued
pursuant to the Oversubscription Privilege. Upon mailing certificates
representing the shares and refunding subscriber's funds for additional shares
subscribed for but not allotted, if any, you shall promptly remit all funds
received in payment of the Subscription Price under the Oversubscription
Privilege to the Company.
5. Purchase of Rights. Until 5:00 p.m., Eastern Daylight Time, on
------------------
the 8/th/ calendar day prior to the Expiration Date, you shall facilitate
purchases of Subscription Certificates by issuing new Subscription Certificates
in accordance with the instructions set forth on the reverse side of the
Subscription Certificates.
6. Defective Exercise of Rights; Lost Subscription Certificates.
------------------------------------------------------------
The Company shall have the absolute right to reject any defective exercise of
Rights or to waive any defect in exercise. Unless requested to do so by the
Company, you shall not be under any duty to give notification to holders of
Subscription Certificates of any defects or irregularities in subscriptions.
Such subscriptions will not be deemed to have been made until any such defects
3
or irregularities have been cured or waived within such time as the Company
shall determine. You shall as soon as practicable return Subscription
Certificates with defects or irregularities which have not been cured or waived
to the holder of the Rights. If any Subscription Certificate is alleged to have
been lost, stolen or destroyed, you should follow the same procedures followed
for lost stock certificates representing shares of Common Stock you use in your
capacity as transfer agent for the Company's Common Stock.
7. Late Delivery. If prior to 5:00 p.m., Eastern Daylight Time,
-------------
on the Expiration Date, you receive (i) payment in full of the Subscription
Price for the shares of Common Stock being subscribed for and (ii) a guarantee
notice (a "Notice of Guaranteed Delivery") substantially in the form delivered
with the Subscription Certificate, from a commercial bank or trust company
having an office or correspondent in the United States, or a member firm of any
registered United States national securities exchange or of the National
Association of Securities Dealers, Inc. stating the certificate number of the
Subscription Certificate relating to the Rights, the name and address of the
exercising shareholder, the number of Rights represented by the Subscription
Certificate held by such exercising shareholder, the number of shares of Common
Stock being subscribed for pursuant to the Basic Subscription Privilege, the
number of shares of Common Stock, if any, being subscribed for pursuant to the
Oversubscription Privilege, and guaranteeing the delivery to you of the
Subscription Certificate evidencing such Rights within three trading days on the
over-the-counter market ("OTC") following the date of the Note of Guaranteed
Delivery, then the Rights may be exercised even though the Subscription
Certificate was not delivered to you prior to 5:00 p.m., Eastern Daylight Time,
on the Expiration Date, provided that within three OTC trading days following
the date of the Notice of Guaranteed Delivery you receive the properly completed
and duly executed Subscription Certificate evidencing the Rights being
exercised, with signature guaranteed if required.
8. Delivery. You shall deliver to the Company the exercised
--------
Subscription Certificates in accordance with written directions received from
the Company and shall deliver the shares of Common Stock to the subscribers who
have duly exercised Rights at their registered addresses as instructed on the
reverse side of the Subscription Certificates.
9. Reports. You shall notify the Company by telephone on or before
-------
the close of business on each business day during the period commencing with the
mailing of the Rights and ending at the Expiration Date (and in the case of
guaranteed deliveries ending three business days after the Expiration Date) (a
"daily notice"), which notice shall thereafter be confirmed in writing of (i)
the number of Rights exercised on the day covered by such daily notice, (ii) the
number of Rights subject to guaranteed delivery on the day covered by such daily
notice, (iii) the number of Rights for which defective exercises have been
received on the day covered by such daily notice, (iv) the number of shares
requested under the Oversubscription Privilege and (v) the cumulative total of
the information set forth in clauses (i) through (iv) above. At or before 5:00
P.M., Eastern Daylight Time on the first business day following the Expiration
Date, you shall certify in writing to the Company the cumulative total through
the Expiration Date of all the information set forth in clauses (i) through
(iii) above. You shall maintain and update a listing of holders who have fully
or partially exercised their Rights, and holders who have not exercised their
Rights. You shall provide the Company or its designee with such information
compiled by you pursuant to this paragraph 9 as any of them shall request.
4
10. Future Instructions. With respect to notices or instructions to
-------------------
be provided by the Company hereunder, you may rely and act on any written
instruction signed by (a) any one or more of the following authorized officers
or employees of the Company: Louis M. Brown, Jr., President and Chief Executive
Officer of the Company or Robert R. Falconi, Senior Vice President and Chief
Financial Officer of the Company; or (b) Thurston R. Moore of Hunton & Williams
or Theodore J. Fisher of Hunton & Williams, both counsel for the Company.
11. Payment of Compensation and Expenses. The Company will pay you
------------------------------------
compensation for acting in your capacity as Subscription Agent hereunder as set
forth on Schedule 1 attached hereto.
12. Counsel. You may consult with counsel satisfactory to you,
-------
which may be counsel to the Company, and the written advice or opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by you hereunder in good faith and in
accordance with such advice or opinion of such counsel.
13. Indemnification. The Company covenants and agrees to indemnify
---------------
and hold you harmless against any costs, expenses (including reasonable fees for
legal counsel), losses or damages, which may be paid, incurred or suffered by or
to which you may become subject, arising from or out of, directly or indirectly,
any claim or liability resulting from your actions as Subscription Agent
pursuant hereto; provided that such covenant and agreement does not extend to
--------
such costs, expenses, losses and damages incurred or suffered by you as a result
of, or arising out of, your own negligence, misconduct or bad faith or that of
any employees, agents or independent contractors used by you in connection with
performance of your duties as Subscription Agent hereunder, or your breaching
any of your obligations under this Agreement.
14. Notices. Unless otherwise provided herein, all reports, notices
-------
and other communications required or permitted to be given hereunder shall be in
writing and delivered by hand or confirmed telecopy or by first class mail,
postage prepaid, as follows:
(a) If to the Company, to:
Precision Auto Care, Inc.
748 Miller Drive, S.E.
Leesburg, Virginia 20175-8919
Telephone: (703) 777-9095
Telecopy: (703) 779-0137
with a copy to:
Thurston R. Moore, Esq.
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
5
Telephone: (804) 788-8200
Telecopy: (804) 788-8218
(b) If to you, to:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
Attention: Herbert Lemmer
Telephone: (718) 921-8200
Telecopy: (718) 234-5001
15. Assignment, Delegation.
----------------------
(a) Neither this Agreement nor any rights or obligations hereunder
may be assigned or delegated by either party without the written consent of the
other party.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns. Nothing in
this Agreement is intended or shall be construed to confer upon any other person
any right, remedy or claim or to impose upon any other person any duty,
liability or obligation.
16. Governing Law. The validity, interpretation and performance of
-------------
this Agreement shall be governed by the law of the Commonwealth of Virginia.
17. Severability. If any provision of this Agreement shall be held
------------
invalid, unlawful, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
19. Captions. The captions and descriptive headings herein are for
--------
convenience of the parties only. They do not in any way modify, amplify, alter
or give full notice of the provisions hereof.
20. Confidentiality. The Subscription Agent and the Company agree
---------------
that all books, records, information and data pertaining to the business of the
other party which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement including the fees for services set forth in the
attached schedule shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.
21. Term. This Agreement shall remain in effect until 30 days'
----
written notice has been provided by either party to the other. Upon termination
of the Agreement, the Subscription Agent shall retain all cancelled Subscription
Certificates and related documentation as required by applicable law.
6
22. Merger of Agreement. This Agreement constitutes the entire
-------------------
agreement between the parties hereto and supercedes any prior agreement with
respect to the subject matter hereof whether oral or written.
If the foregoing is in accordance with your understanding of our
arrangements, please sign and return the enclosed duplicate of this letter.
Very truly yours,
PRECISION AUTO CARE, INC.
__________________________________
By: Louis M. Brown, Jr.
Title: President and Chief Executive Officer
The foregoing is in accordance with our understanding and is hereby
confirmed and accepted.
AMERICAN STOCK TRANSFER &
TRUST COMPANY
___________________________________
By: Herbert Lemmer
Title: Vice President and General Counsel
Dated: January __, 2002
7
SCHEDULE 1
----------
Compensation and Expenses
The Subscription Agent shall submit an invoice to the Company upon
completion of the Rights Offering. The Company shall submit payment of such
invoice within 10 business days of receipt of the invoice.
Compensation and Expenses: $ 7,500 plus reasonable out-of-pocket expenses
--------
incurred