Document:

<PAGE>

Exhibit 10.4

                                VOTING AGREEMENT

         This Voting Agreement (this "Agreement") is made and entered into as of
October 30, 2002, among the undersigned shareholders, including Desarollo
Integrado, S.A. de C.V. ("Desarollo"), which shall become a shareholder as of
even date herewith (collectively, the "Shareholders"), of Precision Auto Care,
Inc., a Virginia corporation (the "Company").

                                    RECITALS

         A.   Concurrently with the execution of this Agreement, Precision
Funding, LLC ("Precision Funding"), Arthur C. Kellar ("Kellar"), Desarollo and
the Company are entering into an Exchange Agreement (the "Exchange Agreement")
that provides, among other things, for the contribution of certain debentures
held by Precision Funding and Kellar in exchange for the issuance by the Company
of certain equity consideration consisting of common stock, preferred stock and
warrants (the "Exchange Equity Consideration").

         B.   The Company's Articles of Incorporation currently do not provide
for a sufficient number of authorized but unissued shares of capital stock to
issue the common stock and common stock issuable upon exercise of the warrants
comprising the Exchange Equity Consideration.

         C.   Pursuant to the Exchange Agreement, the Company has agreed to
submit to its shareholders at its 2002 Annual Meeting of Shareholders (the
"Meeting") a proposal (the "Proposal") to amend the Company's Articles of
Incorporation to increase the number of its authorized but unissued shares of
capital stock from 20,000,000 to 40,000,000, including 39,000,000 shares of
common stock and 1,000,000 shares of preferred stock.

         D.   The Shareholders are or will become as of the date hereof the
beneficial owners (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of the number of outstanding shares of
capital stock of the Company indicated on Annex 1 to this Agreement.

         E.   As a material inducement to enter into the Exchange Agreement,
Precision Funding, Desarollo, Kellar and the Company desire each of the
Shareholders to agree, and in consideration for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, each of the
Shareholders is willing to agree, to vote the Shares and New Shares (each as
defined below) in favor of approval of the Proposal at the Meeting and at any
subsequent shareholders' meeting at which a similar proposal is submitted for
shareholder approval held within two years from the date hereof (a "Subsequent
Meeting").

<PAGE>

         NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:

         1.   Agreement to Vote Shares; Additional Purchases; Transfers and
Encumbrance.

              1.1  Agreement to Vote Shares. During the term of this Agreement,
at the Meeting and at any Subsequent Meeting (whether in person or represented
by proxy), and at every adjournment thereof, and on every action or approval by
written consent of the shareholders of the Company with respect to the Proposal
or any similar proposal, each Shareholder shall vote or cause to be voted the
Shares and any New Shares (as defined below):

              (a)  in favor of approval of the Proposal or any similar proposal,
including all actions contemplated thereby and all actions necessary or
desirable in furtherance thereof; and

              (b)  against any proposal made in opposition to, or in competition
with, the Proposal or any similar proposal.

              1.2  Additional Shareholder Covenants. Until the termination of
this Agreement, (a) no Shareholder shall enter into any voting agreement or
grant any proxy or power of attorney with respect to the Shares or any New
Shares that is inconsistent with the purposes and intent of this Agreement, and
(b) each Shareholder shall use his or its best efforts (within his or its power)
to cause the Proposal to be approved by the requisite vote of all outstanding
shares of stock of the Company.

              1.3  Definition. For purposes of this Agreement, "Shares" shall
mean all issued and outstanding shares of capital stock of the Company of which
a Shareholder is the beneficial owner or over which a Shareholder has voting
control, including any securities convertible into or exercisable or
exchangeable for shares of the Company's capital stock, all as set forth on
Annex 1 attached hereto.

              1.4  Additional Purchases. Each Shareholder agrees that any shares
of capital stock of the Company that such Shareholder purchases, or with respect
to which such Shareholder otherwise acquires beneficial ownership or voting
control after the execution of this Agreement and prior to the date of
termination of this Agreement ("New Shares"), shall be subject to the terms and
conditions of this Agreement to the same extent as if they constituted Shares.

              1.5  Transfer and Encumbrance. During the term of this Agreement,
each Shareholder agrees not to transfer, sell, exchange, pledge, gift, or
otherwise dispose of or encumber (collectively, "Transfer") record ownership or
beneficial ownership, or both, of any of the Shares or any New Shares or to
discuss, negotiate, or make any offer or agreement relating thereto; provided,
however, the foregoing restriction on Transfers shall not apply to any Shares or
New Shares owned or controlled by Kellar or Desarollo if the Proposal is not
approved by the Company's shareholders at the Meeting.

                                       2

<PAGE>

         2.   Irrevocable Proxy. Concurrently with the execution of this
Agreement, each Shareholder shall deliver to the Company a proxy in the form
attached hereto as Exhibit A (the "Proxy") with respect to the Shares and New
Shares, which, subject to Section 5 hereof, shall be coupled with an interest
and irrevocable to the fullest extent permitted by applicable law.

         3.   Representations and Warranties of each Shareholder. Each
Shareholder represents and warrants that (i) he or it is the record owner or
beneficial owner of his or its Shares free and clear of any liens, claims,
pledges, options, rights of first refusal, limitations on voting (except as
provided herein), charges or other encumbrances, and does not beneficially or of
record own any equity securities of the Company other than his or its applicable
Shares, (ii) he or it has not appointed or granted any proxy (other than the
Proxy granted hereunder) that is still effective with respect to his or its
Shares, (iii) he or it has full legal capacity and authority to vote and direct
the voting of the Shares with respect to the matters contemplated hereby and has
full power and authority to make, enter into and carry out the terms of this
Agreement and the Proxy, (iv) this Agreement and all instruments, documents and
agreements contemplated hereby to be executed by or on behalf of such
Shareholder (including, without limitation the Proxy) have been duly executed
and delivered by such Shareholder and constitute the legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with their terms, and (v) neither the execution, delivery or
performance by such Shareholder of this Agreement, nor the consummation by such
Shareholder of the transactions contemplated hereby, will (A) violate, conflict
with or result in a breach of any agreement, contract or other instrument to
which such Shareholder is a party, or (B) violate or conflict with any order,
decree, law, rule or regulation applicable to such Shareholder or by which any
property or asset of such Shareholder is bound.

         4.   Additional Documents. Each Shareholder agrees to execute and
deliver any additional documents necessary or desirable to carry out the intent
of this Agreement or otherwise required in connection with the approval by the
Company's shareholders of the Proposal.

         5.   Termination. This Agreement and the Proxy shall terminate as of
the earlier to occur of (i) such date and time as the Proposal or any similar
proposal shall be approved by the shareholders of the Company or (ii) two years
from the date hereof.

         6.   Miscellaneous.

              6.1  Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, then the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

              6.2  Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns and any person or
entity to which record or beneficial ownership of such Shares or New Shares
shall pass, whether by operation of law or otherwise, but, except as

                                       3

<PAGE>

otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by any of
the parties.

         6.3  Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.

         6.4  Specific Performance; Injunctive Relief. The parties hereto
acknowledge that there will be irreparable harm and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
the Shareholders set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to the parties hereto upon any such
violation, each party shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available at law or in equity. This Agreement and the covenants of the
Shareholders set forth herein are intended for and shall inure to the benefit of
the Company, its successors and assigns, and the Company and its successors and
assigns shall be entitled to assert and enforce, and shall be entitled to all
rights and remedies with respect to, such covenants as an express third party
beneficiary under this Agreement.

         6.5  Notices. All notices and other communications relating to this
Agreement shall be in writing, shall be (i) upon delivery, if delivered
personally or by commercial messenger or courier service, (ii) one business day
after the day of a facsimile transmission, if sent by facsimile with confirming
copy by U.S. mail (first class, postage prepaid), or (iv) one business day after
the business day of deposit with Federal Express or similar carrier for
overnight delivery, freight prepaid, in each case to the parties at the
addresses (or at such other address for a party as shall be specified by like
notice) set forth on Annex 1.

         6.6  Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia, without regard to its conflicts of laws
provisions.

         6.7  Entire Agreement. This Agreement contains the entire understanding
of the parties in respect of the subject matter hereof, and supersedes all prior
negotiations and understandings between the parties with respect to such subject
matter.

         6.8  Effective Date. This Agreement shall become effective upon
execution of the Exchange Agreement.

                                       4

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.

                                              DESAROLLO INTEGRADO, S.A. de C.V.

                                              By:_______________________________
                                              Name:_____________________________
                                              Title:____________________________

                                              __________________________________
                                              Louis M. Brown, Jr.

                                              __________________________________
                                              Arthur C. Kellar

                                              __________________________________
                                              Woodley A. Allen

                                              __________________________________
                                              Lynn E. Caruthers

                                              __________________________________
                                              Bernard H. Clineburg

                                              __________________________________
                                              John D. Sanders, Ph.D

                                       5

<PAGE>

                                             ___________________________________
                                             Bassam N. Ibrahim

                                             ___________________________________
                                             Robert R. Falconi

                                             ___________________________________
                                             John T. Wiegand

                                             ___________________________________
                                             Mauricio Zambrano

                                             FALCON SOLUTIONS, Ltd.

                                             By:________________________________
                                             Name:______________________________
                                             Title:_____________________________

                                       6

<PAGE>

                                     ANNEX 1

         Each Shareholder beneficially owns and has voting control over the
following capital stock of the Company:

Shareholder                Address for Notice                      Capital Stock
-----------                ------------------                      -------------
Desarollo Integrado,       Blvd. Diaz Ordaz #200                               0
   S.A. de C.V.            Col. Santa Maria
                           Monterrey, N.L. CP 64650
                           Attn: Mauricio Zambrano

Louis M. Brown, Jr.        c/o Precision Auto Care, Inc.               2,725,380
                           748 Miller Drive, S.E.
                           Leesburg, Virginia 20175

Arthur C. Kellar           106 Ebbtide Drive                           1,849,594
                           North Palm Beach, Florida 33408

Woodley A. Allen           2831 Rifle Ridge Road                          29,588
                           Oakton, Virginia 22124

Lynn E. Caruthers          c/o Caruthers Properties, Ltd.                216,906
                           4600 North Fairfax Drive, Suite 1000
                           Arlington, Virginia 22203

Bernard H. Clineburg       2707 North Wakefield Street                    26,097
                           Arlington, Virginia 22204

John D. Sanders, Ph.D.     2500 Virginia Avenue                           58,200
                           Watergate East - 1408-S
                           Washington, D.C. 20037

Bassam N. Ibrahim          1555 Shelford Ct.                              20,348
                           Vienna, Virginia 22182

Robert R. Falconi          c/o Precision Auto Care, Inc.                 344,779
                           748 Miller Drive, S.E.
                           Leesburg, Virginia 20175

John T. Wiegand            43289 Hill Head Place                          16,250
                           Leesburg, Virginia 20176-3903

Falcon Solutions, Ltd.     Blvd. Diaz Ordaz #200                       1,824,594
                           Col. Santa Maria
                           Monterrey, N.L. CP 64650
                           Attn:  Mauricio Zambrano

Mauricio Zambrano          Blvd. Diaz Ordaz #200                           3,597
                           Col. Santa Maria
                           Monterrey, N.L. CP 64650

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: _________________________________

         Print Name of Shareholder: ________________________________
                                          Louis M. Brown, Jr.

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: _________________________________

         Print Name of Shareholder: ________________________________
                                           Arthur C. Kellar

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: _________________________________

         Print Name of Shareholder: ________________________________
                                         Woodley A. Allen

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: _________________________________

         Print Name of Shareholder: ________________________________
                                          Lynn E. Caruthers

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: ____________________________

         Print Name of Shareholder: ___________________________
                                       Bernard H. Clineburg

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: ____________________________

         Print Name of Shareholder: ___________________________
                                       John D. Sanders, Ph.D

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: ____________________________

         Print Name of Shareholder: ___________________________
                                         Bassam N. Ibrahim

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all necessary
                  or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: ____________________________

         Print Name of Shareholder: ___________________________
                                         Robert R. Falconi

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated:   October 30, 2002

         Signature of Shareholder: ____________________________

         Print Name of Shareholder: ___________________________
                                        John T. Wiegand

<PAGE>

                                    EXHIBIT A

                                IRREVOCABLE PROXY

         The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Robert R. Falconi,
Frederick F. Simmons and Everett Casey, and each of them, as the sole and
exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the voting of the Shares and New Shares on the matters described
below (and on no other matter), until such time as the Voting Agreement shall be
terminated in accordance with its terms. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.

         This proxy is irrevocable (to the fullest extent permitted by law and
subject to the termination of the Proxy as set forth in Section 5 of the Voting
Agreement of even date among certain shareholders of the Company (the "Voting
Agreement")), is granted pursuant to the Voting Agreement, is granted in
consideration of Precision Funding, Desarollo, Kellar and the Company entering
into that certain Exchange Agreement and is coupled with an interest. The
attorneys and proxies named above will be empowered at any time prior to the
termination of this proxy pursuant to Section 5 of the Voting Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares and the New Shares) of
the undersigned at the Meeting and at any Subsequent Meeting, and in every
written consent in lieu of any such meeting, to vote the Shares and the New
Shares:

         (i)      in favor of approval of the Proposal or any similar proposal
                  including all actions contemplated thereby and all actions
                  necessary or desirable in furtherance thereof; and

         (ii)     against any proposal made in opposition to, or in competition
                  with, the Proposal or any similar proposal (collectively, the
                  matters identified in clauses "(i)" and "(ii)" hereof are
                  referred to herein as the "Specified Matters").

         The attorneys and proxies named above shall exercise this proxy only to
vote the Shares and any New Shares in respect of the Specified Matters at any
time prior to the termination of this proxy pursuant to Section 5 of the Voting
Agreement, at the Meeting and at any Subsequent Meeting and in every written
consent in lieu of such meeting. The undersigned Shareholder may vote the Shares
and New Shares on all matters other than the Specified Matters.

         Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.

         All capitalized terms used herein and not otherwise defined shall have
the meaning assigned to such term in the Voting Agreement.

         This proxy is irrevocable and coupled with an interest.

         Dated: October 30, 2002

         Signature of Shareholder: ____________________________

         Print Name of Shareholder: ___________________________
                                        Mauricio Zambrano<PAGE>

                                                                  Exhibit 10 (a)

                    COMMONWEALTH TELEPHONE ENTERPRISES, INC.

                          EXECUTIVE STOCK PURCHASE PLAN

              As Amended and Restated, Effective September 5, 2002

     1. Purpose. The purpose of the Commonwealth Telephone Enterprises, Inc.
Executive Stock Purchase Plan is to strengthen the mutuality of interests
between executives and shareholders. The Plan offers certain executives of
Commonwealth Telephone Enterprises Inc. and its affiliated companies the
opportunity to defer the receipt of a portion of their compensation on a pre-tax
basis and to have the deferred amounts reflect the value of the common stock of
Commonwealth Telephone Enterprises, Inc. Further, Commonwealth Telephone
Enterprises, Inc. will credit matching contributions equal to 100% of the
executive's deferrals. Subject to certain limitations, as described herein,
matching contributions will be credited to the executive's matching account in
the form of share units of common stock of Commonwealth Telephone Enterprises,
Inc. Subject to the executive's election regarding the timing of payment, a
number of shares of common stock of Commonwealth Telephone Enterprises, Inc.
equal to the number of share units credited to the executive's matching
contribution account will be paid to the executive if he or she remains an
employee for three years following the purchase. The Plan, as amended and
restated effective September 5, 2002, shall only apply to Participants who are
credited with service to the Company on or after December 20, 1998.

     2. Definitions. Unless the context otherwise requires, the following words
as used herein shall have the following meanings:

          "Account" means the Deferral Account and the Matching Account, which
          are bookkeeping accounts established pursuant to the Plan and
          maintained in the names of the respective Participants, to which all
          amounts deferred and the Company match thereon, along with any
          dividends paid, shall be credited in the form of Share Units, and from
          which all amounts distributed under the Plan shall be debited.

          "Administrator" means the Company or person or any entity to which the
          Board delegates this function under Section 10.

          "Affiliated Company" means each corporation, 100% of the stock of
          which is owned, directly or indirectly, by the Company.

          "Annual Compensation" shall mean, with respect to any Eligible
          Employee in any calendar year, the sum of (i) such Eligible Employee's
          base salary for such year plus (ii) any short-term bonus paid to such
          Eligible Employee during the calendar year. The Administrator shall
          have

<PAGE>

          the sole discretion to determine an Eligible Employee's Annual
          Compensation as of any relevant time in accordance with the provisions
          of the Plan.

          "Applicable Dividends" means, with respect, with respect to a Share
          Unit, the aggregate number of Share Units credited to a Participants
          Account under Section 5.3 and to a Participant's Matching Account
          under Section 6 as a result of a dividend paid by the Company in
          respect to its common shares.

          "Applicable Election Date" means the following:

                    a)   Except as provided in (b), with respect to the
                         deferral of base compensation earned during any
                         payroll period, December 31 of the calendar year
                         immediately preceding the commencement of such
                         payroll period;

                    b)   With respect to the deferral of base compensation
                         earned during any payroll period in the first
                         calendar year for which an Employee is an Eligible
                         Employee, the first day of the calendar quarter
                         following his or her becoming an Eligible
                         Employee;

                    c)   With respect to any short-term bonus, December 31
                         of the calendar year immediately preceding the
                         calendar year in which the bonus is paid; and

                    d)   With respect to accumulated balances of an
                         Account, by December 31 of the calendar year
                         preceding the calendar year in which all, or any
                         portion of, the Account would be distributable.

          "Board" means the board of directors of the Company.

          "Change in Control" means:

                    a)   The acquisition by any person, entity, or "group,"
                         within the meaning of Section 13(d)(3) or 14(d)(2)
                         of the Securities Exchange Act of 1934, as amended
                         (the Exchange Act), other than Level 3 Telecom
                         Holdings, Inc. and any affiliate of Level 3
                         Telecom Holdings, Inc. of beneficial ownership
                         (within the meaning of Rule 13d-3 promulgated
                         under the Exchange Act) of more than 50% of either
                         (i) the then outstanding Shares or (ii) the
                         combined voting power of the Company's then
                         outstanding voting securities;

<PAGE>

                    b)   Effective upon the consummation of any such
                         transaction, approval by the shareholders of the
                         Company of a reorganization, merger, or
                         consolidation, in each case, with respect to which
                         persons who were the shareholders of the Company
                         immediately prior to such reorganization, merger,
                         or consolidation, do not, immediately thereafter,
                         own more than 50% of the combined voting power
                         entitled to vote generally in the election of
                         directors of the reorganized, merged, or
                         consolidated company's then outstanding voting
                         securities, or a liquidation or dissolution of the
                         Company or the sale of substantially all of the
                         assets of the Company; or

                    c)   The replacement of more than 50% of the members of
                         the Board with persons who were not nominated or
                         otherwise designated by the remaining members of
                         the Board.

          "Company" means Commonwealth Telephone Enterprises, Inc., a
          Pennsylvania corporation.

          "Company Matching Contribution" means an amount, deposited with the
          Trustee, equal to the total of the deferrals of Eligible Employees for
          any period.

          "Deferral Account" means the bookkeeping account established by the
          Administrator for each Participant to reflect the Share Units credited
          with respect to such Participant pursuant to Section 5.

          "Deferral Date" means the date or dates on which base compensation,
          short-term bonus, or an accumulated Account balance, to which any
          Election Form relates, would otherwise have been paid.

          "Disability" means a disability with respect to which a
          Participant is eligible for and receiving benefits under a
          long-term disability program sponsored by the Company or an
          Affiliated Company.

          "Dividend Payment Date" means the date on which a dividend is
          paid by the Company with respect to Shares.

          "Effective Date" means October 1, 1997. The effective date of
          this amendment and restatement of the Plan is September 5, 2002.

          "Election Form" means the election form described in Section 5.5.

<PAGE>

          "Eligible Employee" means an Employee who is designated by the
          Board as eligible to participate in the Plan and who has
          completed one full calendar quarter of employment with the
          Company or an Affiliated Company.

          "Employee" means an employee of the Company or an Affiliated
          Company.

          "Entry Date" means, for any Eligible Employee, the first day of
          the first calendar quarter following his or her becoming an
          Eligible Employee.

          "Fair Market Value" of a Share on any given day means:

                    (a)  The closing price per Share on the national
                         securities exchange on which the Shares are
                         principally traded on the next preceding date on
                         which there was a sale of Shares on such exchange;
                         or

                    (b)  If the Shares are not listed or admitted to
                         trading on any such exchange, the closing price
                         per Share on the Nasdaq National Market on the
                         next preceding date on which there was a sale of
                         Shares, or if such closing price is not available,
                         the average of the highest reported bid and lowest
                         reported asked prices per Share as reported by
                         NASDAQ on the next preceding date on which such
                         bid and asked prices were reported; or

                    (c)  If the Shares are not then listed on any
                         securities exchange or prices therefore are not
                         then quoted in NASDAQ, the value determined by the
                         Administrator in good faith.

          "Fund" means the fund maintained under the Trust Agreement.

          "Matching Account" means the bookkeeping account established by
          the Administrator for each Participant to reflect Share Units
          credited pursuant to Section 6.

          "Normal Retirement" means age 65 and five years of service or an
          age greater than 65 when 5 years of service are attained.

          "Participant" means any Eligible Employee or former Eligible
          Employee who has elected to participate in the Plan as described
          in Section 4, or who has an undistributed amount credited to a
          Deferral Account or a Matching Account.

          "Plan" means Commonwealth Telephone Enterprises Inc. Executive
          Stock Purchase Plan, as set forth herein, and as amended from
          time to time.

<PAGE>

          "Pre-Tax Contribution" means the amount of a Participant's
          contribution to the Plan as determined under Section 5.1.

          "Purchase Date" means, with respect to a Deferral Date or a
          Dividend Payment Date, the date or dates on which the Trustee
          purchases Shares to reflect the Pre-Tax Contributions and the
          Company Matching Contribution made on such Deferral Date or the
          dividends paid on such Dividend Payment Date. The Trustee may
          purchase Shares from the Company or on the open market.

          "Share Units" means units credited to a Participant's Deferral
          Account under Sections 5.2 and 5.3 and units credited to a
          Participant's Matching Account under Section 6.

          "Shares" means Common Stock of the Company, par value $1.00 per
          share.

          "Trust Agreement" means the agreement of trust entered into
          between the Company and the Trustee for purposes of the Plan.

          "Trustee" means the individual(s) or corporate trustee appointed
          as trustee under the Trust Agreement.

          "Unforeseeable Emergency" means an unanticipated emergency that
          is caused by an event beyond the control of the Participant and
          that would result in severe financial hardship to the Participant
          if early withdrawal were not permitted.

     3. Shares. Not more than 400,000 Shares and Share Units in the aggregate,
without duplication, may be issued under the Plan, subject to adjustment as
provided in Section 13.2.

     4. Eligibility to Participate. Any Eligible Employee shall be eligible to
participate in the Plan. An Eligible Employee shall become a Participant by
delivering to the Administrator an executed Election Form and such other forms
as may be required by the Administrator.

     5. Pre-Tax Contributions

<PAGE>

          5.1. Election to Participate.

               5.1.1. Deferral of Base Compensation. An Eligible Employee may
elect to defer receipt of all or a portion (in whole percentages) of his or her
base compensation payable by the Company or an Affiliated Company attributable
to any payroll period beginning on or after the Entry Date by executing an
Election Form and filing it with the Administrator on or before the Applicable
Election Date. Deferrals by any Eligible Employee pursuant to this Section 5.1.1
shall not exceed 20% of such Eligible Employee's projected base compensation for
the year in question, as determined by the Administrator from time to time.
Subject to the foregoing, each Eligible Employee shall specify on such Election
Form the schedule of Deferral Dates on which such aggregate amount is to be
withheld and contributed to the Plan.

               5.1.2. Deferral of Bonus. Subject to Section 5.1.3, an Eligible
Employee may elect to defer receipt of all or a portion (in whole percentages)
of his or her short-term bonus paid by the Company or an Affiliated Company on
or after the Entry Date by executing an Election Form and filing it with the
Administrator on or before the Applicable Election Date.

               5.1.3. Limitations on Pre-Tax Contributions. An Eligible
Employee's Pre-Tax Contribution under Sections 5.1.1 and 5.1.2 for any calendar
year shall not exceed 20% of such Eligible Employee's Annual Compensation for
such year. The Administrator shall adjust the Eligible Employee's Pre-Tax
Contributions as it determines necessary to meet the requirements of this
Section 5.1.3.

               5.1.4. Re-Deferral of Scheduled Distributions. Participant
Accounts scheduled for distribution pursuant to Section 7.1 may be further
deferred by the Participant on an annual basis as long as Participant completes
and returns an annual election form to re-defer said distribution on or before
December 31 of the year preceding the scheduled distribution.

          5.2. Crediting Accounts. On any Purchase Date, but as of the
applicable Deferral Date, the Administrator shall credit each Participant's
Deferral Account and Matching Account with a number of Share Units, rounded to
the nearest 0.0001 of a Share, determined as follows:

               5.2.1. an amount, rounded down to the next lowest whole number,
obtained by dividing:

                    5.2.1.1. the amount of all Participants' Pre-Tax
Contributions and the Company Matching Contribution attributable to such
Deferral Date that is invested on such Purchase Date; by

                    5.2.1.2. the average per Share cost paid by the Trustee on
such Purchase Date with respect to such Deferral Date; provided, however, that
if the Trustee purchases (or notionally purchases) the Shares from the Company,
the Trustee's average per Share cost, for purposes of this Section 5.2, shall be
the Fair Market Value per Share on such Deferral Date;

<PAGE>

               5.2.2. multiplied by a fraction:

                    5.2.2.1. the numerator of which is the Participant's Pre-Tax
Contribution and Company Matching Contribution attributable to such Deferral
Date; and

                    5.2.2.2. the denominator of which is all Participants'
Pre-Tax Contributions and Company Matching Contributions attributable to such
Deferral Date.

          5.3. Crediting of Dividends to Accounts.

               5.3.1. Cash Dividends. If the Company pays a cash dividend with
respect to Shares, then as of the Dividend Payment Date, the Company shall
credit each Participant's Deferral Account with a number of Share Units
determined as follows:

                    5.3.1.1. an amount, rounded to the nearest 0.0001 of a
Share, obtained by dividing

                         5.3.1.1.1. the amount of the dividend paid on such
Dividend Payment Date with respect to a Share multiplied by the number of Share
Units credited to all Participants' Accounts on the record date for such
Dividend; by

                         5.3.1.1.2. the average per Share cost paid by the
Trustee on the Purchase Date with respect to such Dividend Payment Date;
provided, however, that if the Trustee purchases (or notionally purchases) the
Shares from the Company, the Trustee's average per Share cost, for purposes of
this Section 5.3, shall be the Fair Market Value per Share on such Dividend
Payment Date;

                    5.3.1.2. multiplied by a fraction:

                         5.3.1.2.1. the numerator of which is the number of
Share Units credited to the Participant's Deferral Account on the record date
for such Dividend; and

                         5.3.1.2.2. the denominator of which is the number of
Share Units credited to all Participants' Accounts on the record date for such
Dividend.

               5.3.2. Share Dividends. If the Company pays a dividend with
respect to Shares in the form of additional Shares, then as of the Dividend
Payment Date, the Company shall credit each Participant's Deferral Account with
a number of Share Units equal to the product of:

                    5.3.2.1. the Share Units credited to the Participant's
Deferral Account on the record date for such Dividend; and

<PAGE>

                    5.3.2.2. the number of Shares payable as a dividend for each
outstanding Share.

               5.3.3. Extraordinary Dividends. Except as set forth in Sections
5.3.1 and 5.3.2, dividends and distributions in respect of Shares shall be
treated in accordance with Section 13.2.

          5.4. Treatment of Excess Cash. An amount representing the amount
received by the Trustee under Section 5.6.1 and not used to purchase Shares
shall be allocated in any reasonable manner by the Administrator, including, but
not limited to, allocating such amounts as of the next Deferral Date among
Participants' Deferral Accounts pro-rata or in proportion to Participant's
Pre-Tax Contributions attributable to such Deferral Date. Amounts shall be
allocated to the purchase of Shares in the order in which received by the
Trustee.

          5.5. Election Form. Each Election Form shall be in form and substance
satisfactory to the Administrator, and shall set forth:

               5.5.1. the amount of base compensation and/or short term bonus to
be deferred and the Deferral Date(s) on which such deferrals are to be effected,
subject to Section 5.1.3;

               5.5.2. the date on which distributions shall commence under
Section 7;

               5.5.3. if distributions are to commence under Section 7, whether
such distributions will be a single sum or in installments; and

               5.5.4. the beneficiary or beneficiaries to whom benefits should
be paid in the event of the Participant's death.

          An Election Form providing for the deferral of all or a portion of
base compensation or short-term bonus shall remain in effect until revoked or
replaced by a new Election Form.

          5.6. Funding.

               5.6.1. On or as soon as administratively practicable following
each Deferral Date, an amount equal to the amount, in cash or in common shares
of Commonwealth Telephone Enterprises, Inc., deferred by all Participants and
the Company Matching Contribution shall be paid by the Company to the Trustee,
and shall thereafter be held by the Trustee in accordance with the terms of the
Trust Agreement. Should the amount be paid in cash, The Trustee will, as soon as
practical, purchase the maximum number of common shares of Commonwealth
Telephone Enterprises, Inc. The Trustee shall have full discretion in the
purchase of these shares.

<PAGE>

               5.6.2. Amounts contributed to the Trustee under the Trust
Agreement and assets purchased with such amounts shall be subject to the claims
of the Company's creditors and creditors of Affiliated Companies.

               5.6.3 To the extent that any benefits provided under the Plan are
actually paid from the Fund, the Company shall have no further obligation with
respect to such benefits.

               5.6.4. Neither a Participant, nor any beneficiary nor any other
person shall be deemed to have any property interest, legal or equitable, in any
specific asset of the Company or any Affiliated Company or of the Fund with
respect to any right to payment of any amount pursuant Section 5. To the extent
that any person acquires any right to receive payments under the Plan of an
amount credited to an Account, such right to payment shall be no greater than,
nor shall it have any preference or priority over, the rights, of any unsecured
general creditor of the Company or any Affiliated Company.

          5.7. Voting Rights. Share Units represent a number of Shares for
bookkeeping purposes only. Accordingly, Participants shall have no voting rights
or any other rights of a shareholder with respect to such Share Units.
Notwithstanding the foregoing, however, the Company may, but shall not be
required to, establish a procedure pursuant to which a Participant may direct
the Trustee regarding the voting of a number of Shares held pursuant to the
Trust Agreement equal to the number of Share Units credited to the Participant's
Deferral Account and/or Matching Account.

          5.8. Unforeseeable Emergency. In the event of an Unforeseeable
Emergency as determined by the Administrator, a Participant may receive a lump
sum payment in an amount necessary to meet the emergency, but not in excess of
the amount credited to his Deferral Account. Such amount shall be paid in
Shares, and the Participant's Deferral Account shall be debited accordingly.

          5.9. Beneficiary Designation. Each Participant shall designate on his
or her Election Form the beneficiary or beneficiaries who shall receive payments
of Shares under Section 7 upon the Participant's death. A Participant may amend
any beneficiary designation by filing a written amendment thereof with the
Administrator. If the Participant has not made an effective beneficiary
designation, or if the designated beneficiary predeceases the Participant, the
Participant's beneficiary shall be the Participant's estate.

          5.10. Non Pro Rata Deferrals. Notwithstanding any other provision of
this Section 5, with respect to the payment under Section 7 of any Excess Share
Units, as hereinafter defined, the Administrator in its sole discretion may
distribute, in lieu of one Share or the Fair Market Value thereof, an amount in
cash equal to the value per Share used for purposes of Sections 5.2.1.2 and
5.3.1.1.2 in crediting such Excess Share Unit to the applicable Deferral
Account. For purposes of this Section 5.11, "Excess Share Units" shall mean that
number of Share Units credited to such Deferral Account in excess of the number
of Share Units that would have been so credited had the Participant elected a
"Pro Rata Deferral"; and a "Pro Rata Deferral" shall mean a deferral on any
Deferral Date of a percentage of base compensation not in excess of 20%.

<PAGE>

     6. Matching Contributions.

          6.1. Matching Contributions. As of each Deferral Date, the Company
shall pay to the Trustee an amount, in cash or in shares, equal to the amount of
the Eligible Employee deferrals and the Administrator shall credit to each
Participant's Matching Account, Share Units equal to the amount of Share Units
credited to the Participants Deferral Account.

          6.2. Forfeiture of Matching Share Units. Shares credited to
Participants' Matching Accounts under Section 6.1 shall be subject to the
following terms:

               6.2.1. If the Participant terminates employment with the Company
and all Affiliated Companies prior to the lapse of 12 consecutive full calendar
quarters following the date as of which Share Units are credited under Section
6.1, other than due to death, disability, or Normal Retirement, the Participant
shall forfeit all rights to the Share Units and the Shares shall be released
from the Participant's Matching Account. Share Units credited to a Participant's
Matching Account shall vest if the Participant remains employed by the Company
or any Affiliated Company until the lapse of 12 consecutive full calendar
quarters following the date as of which such Share Units are credited under
Section 6.1, or if earlier, upon (i) a Change in Control, (ii) Normal Retirement
or (iii) the Participant's termination of employment with the Company and all
Affiliated Companies due to death or disability.

               6.2.2 Share Units credited to Participants' Matching Accounts are
for bookkeeping purposes only. Accordingly, Participants shall have no voting
rights or any other rights of a shareholder with respect to such Share Units.

          6.3 Return of Forfeited Shares. At the Company's discretion, the
Trustee shall return either cash or shares, in the amount equal to the value of
Share Units forfeited by Participants.

     7. Commencement and Form of Distribution. Amounts representing Share Units
credited to a Participant's Account shall be distributed as follows:

          7.1. Commencement Date.

               7.1.1. In General. Subject to Sections 7.1.2 and 7.3, as soon as
administratively practicable following the earlier of (i) the Participant's
termination of employment with the Company and all Affiliated Companies, or (ii)
the date or dates designated by the Participant in his or her Election Form
(which shall not be earlier than following the lapse of 12 consecutive full
calendar quarters following the applicable Deferral Date), the Company shall
commence to issue or pay to the Participant:

                    7.1.1.1. A number of Shares equal to the number of whole
Share Units credited to the Participant's Account, plus an amount of cash in
lieu of fractional Share Units if no subsequent distribution dates are
anticipated;

<PAGE>

               7.1.2. Change in Control.

                    7.1.2.1. As soon as administratively practicable following a
Change in Control of the Company, the Company shall commence to issue or pay to
the Participant a number of Shares equal to the number of whole Share Units
credited to the Participant's Account, plus an amount of cash in lieu of
fractional Share Units, or, as determined by the Administrator, cash having a
value equal to the value of the Participant's Account.

          7.2. Form of Payment. Cash shall be paid in a single sum payment and
shares shall be issued, as elected by the Participant in the applicable Election
Form, in a single payment or in substantially equal quarterly installments over
ten years. The Administrator may accelerate any such installment for any reason,
in its sole discretion.

          7.3. Payment following Death of Participant. Notwithstanding the
election made by the Participant under Section 5.5, as soon as administratively
practicable following the death of a Participant, the Company shall issue to the
Participant's beneficiary or beneficiaries (as designated in accordance with
Section 5.9), a number of Shares equal to the number of Share Units credited to
the Participant's Deferral Account and Company Matching Account and cash in lieu
of fractional Share Units plus the amount of cash, if any, allocated to such
Account at the time of such distribution.

          7.4. Shares Subject to Distribution. The Shares distributed under the
Plan may be un-issued shares or treasury shares, including Shares held in the
Fund and Shares bought on the open market. Shares distributed under the Plan
shall be validly issued, fully paid and non-assessable.

     8. Non-assignment. The rights and privileges conferred under this Plan and
any Shares issued under Section 6.1 for so long as such Shares remain subject to
forfeiture pursuant to the terms of Section 6.2 shall not be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
such right or privilege or Shares (which Shares are subject to forfeiture)
contrary to the provisions hereof, including the levy of any attachment or
similar process thereon, shall be without effect.

     9. Incapacity of Recipient. Any Shares or cash payable under the Plan,
including Shares distributable from escrow under Section 6.2, to a person who is
under a legal disability may be made to or for the benefit of such person in
such of the following ways as the Administrator shall determine:

<PAGE>

          9.1. to such person;

          9.2. to the legal representative of such person;

          9.3. to a near relative of such person to be used for such person's
benefit; or

          9.4. to pay the expenses of support, maintenance or education of such
person.

          The Administrator shall not be required to see to the application by
any third party of payments made pursuant to this Section.

     10. Administration. The Plan shall be administered by the Company or by any
person or entity to which the Board delegates administrative responsibilities
under the Plan. The Administrator shall be responsible for and shall have sole
discretion with respect to:

          10.1. the maintenance of any records necessary in connection with the
operation of the Plan;

          10.2. calculating amounts to be credited to Participants' Deferral
Accounts and Matching Accounts, and the amount of payments due to Participants
and beneficiaries from such Accounts;

          10.3. interpreting the provisions of the Plan;

          10.4. directing the Trustee to pay benefits out of the Fund; and

          10.5. otherwise administering the Plan in accordance with its terms.

     11. Claims Procedures. At any time that the Administrator makes a
determination adverse to a Participant or beneficiary with respect to a claim
for benefits or participation under the Plan, the Administrator shall notify the
claimant in writing of such determination, setting forth:

          11.1. the specific reason for such determination;

          11.2. a reference to the specific provision or provisions of the Plan
on which such determination is based;

          11.3. a description of any additional material or information
necessary to perfect the claim, and an explanation of the reason that such
material is required; and

          11.4. an explanation of the rights and procedures set forth in this
Section 10.

<PAGE>

          A person who receives notice of an adverse determination by the
Administrator with respect to a claim may request, within 60 days of receipt of
such notice, that the Administrator review the previous determination. This
request may be made on behalf of a claimant by a duly authorized representative.
The claimant or representative may review pertinent documents and submit issues
and comments with respect to the controversy to the Administrator. The
Administrator shall render a decision within 60 days of receipt of a request for
review, which decision shall be in writing and shall set forth the specific
reasons for the decision reached and the specific provisions of the Plan on
which the decision is based. A copy of the ruling shall be forwarded to the
claimant.

     12. Employee Benefit Plans. The Plan shall not in any way affect a
Participant's right to participate in any pension, profit-sharing, incentive,
thrift, group insurance, death benefit, stock option, termination pay or similar
plans of the Company or any Affiliated Company, which are now in effect or may
hereafter be adopted, to the extent that the Participant is entitled to
participate under the applicable terms and provisions of such plans.
Contributions and benefits under the Plan shall not be included in determining a
Participant's benefits under any retirement plan qualified under section 401(a)
of the Internal Revenue Code of 1986, as amended, in which such Participant may
participate, except as may otherwise be provided in such other plan.

     13. Amendment and Termination.

          13.1. The Plan shall remain in effect until terminated by the Board.
The Board shall have the power to amend or terminate the Plan at any time, and
to freeze or suspend contributions to the Plan at any time, provided that the
amendment or termination of the Plan shall not impair the rights of any
Participant with respect to any amount credited to an Account at the time of
amendment or termination without the Participant's consent. The Board may submit
certain amendments to the shareholders for their approval in order to comply
with Rule 16b-3, or for any other reason.

          13.2. With the exception of the events described in Sections 5.3.1 and
5.3.2, in the event that the Board determines that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment is
determined by the Board to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Board may, in such manner as it may deem equitable,
make such adjustments and take such actions in respect of Shares and Share Units
hereunder as it deems appropriate, desirable or necessary.

<PAGE>

     14. Miscellaneous.

          14.1. The existence of the Plan and the execution of an Election Form
and any actions undertaken thereunder shall not confer upon Participant any
right to continued employment at the Company or any Affiliated Company.

          14.2. The Plan shall be administered under and in accordance with the
laws of Pennsylvania.

          14.3. The terms of the Plan and the Election Forms and the decisions
of the Administrator shall be binding upon the Company and all Affiliated
Companies, their successors and assigns, and each Participant and his or her
heirs and legal representatives.

          14.4. Prior to any distribution of Shares to the Participant
hereunder, the Participant and the Company shall enter into a mutually
satisfactory arrangement to satisfy applicable federal, state, local or other
tax withholding requirements with respect to the distribution.

          Any taxes imposed on a Participant shall be the sole responsibility of
the Participant. Without limiting the generality of the foregoing, if any
(contribution or payment under the Plan obligates the Company or an Affiliated
Company to deduct or withhold an amount for purposes of federal, state, local or
other taxes, such obligation may be satisfied by (1) deducting such taxes from
any contributions or payments made pursuant to the Plan or any cash compensation
payable with respect to the Participant or (2) the remittance by the Participant
of an amount equal to the amount required to be deducted or withheld prior to
such contribution or payment, as determined by the Company or the Affiliated
Company in its sole discretion.

          14.5. Effect of Denial of Tax Treatment. Pre-tax Contributions under
Section 5 and issuances of Shares under Section 6 are intended to be taxable to
Participants for income taxes no earlier than the time that Shares or other
amounts are distributed by the Trustee or the escrow agent, as the case may be.
If, in the sole determination of the Administrator, taxation of any such amount
to Participants is accelerated to any earlier time, the Administrator shall
cause that number of Shares or other amounts to be distributed to Participants
equal in value to the accelerated income.

<PAGE>

          14.6. Section 16. The Administrator may issue special rules relating
to participation by Employees who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended from time to time.

                                         COMMONWEALTH TELEPHONE ENTERPRISES INC.

                                         By: /s/ Michael J. Mahoney
                                             -----------------------------------
                                         Title: President

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