EXHIBIT 1
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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"), Xxxxxx X. Xxxxxx ("Xxxxxx"), 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 Xxxxxx 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, Xxxxxx 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").
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
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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 Xxxxxx or Desarollo if the Proposal is not
approved by the Company's shareholders at the Meeting.
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
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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 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
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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.
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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: /s/ Xxxxxxxx X. Xxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxx
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Title: Managing Director
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/s/ Xxxxx X. Xxxxx, Xx.
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Xxxxx X. Xxxxx, Xx.
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
/s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxxx, Ph.D
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Xxxx X. Xxxxxxx, Ph.D
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
/s/ Xxxxxxxx Xxxxxxxx
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Xxxxxxxx Xxxxxxxx
FALCON SOLUTIONS, Ltd.
By: /s/ Xxxxxxx Xxxxxxx /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxxxx Xxxxxxx Xxxxx
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Title: Director Director
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6
ANNEX 1
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Each Shareholder beneficially owns and has voting control over the
following capital stock of the Company:
Shareholder Address for Notice Capital Stock
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Desarollo Integrado, Blvd. Xxxx Xxxxx #200 0
S.A. de C.V. Col. Santa Xxxxx
Monterrey, N.L. CP 64650
Attn: Xxxxxxxx Xxxxxxxx
Xxxxx X. Xxxxx, Xx. c/o Precision Auto Care, Inc. 2,725,380
000 Xxxxxx Xxxxx, X.X.
Xxxxxxxx, Xxxxxxxx 00000
000 Xxxxxxx Xxxxx
Xxxxxx X. Xxxxxx Xxxxx Xxxx Xxxxx, Xxxxxxx 00000 1,849,594
Xxxxxxx X. Xxxxx 0000 Xxxxx Xxxxx Xxxx 00,000
Xxxxxx, Xxxxxxxx 00000
Xxxx X. Xxxxxxxxx c/o Caruthers Properties, Ltd. 216,906
0000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Xxxxxxx X. Xxxxxxxxx 0000 Xxxxx Xxxxxxxxx Xxxxxx 26,097
Xxxxxxxxx, Xxxxxxxx 00000
Xxxx X. Xxxxxxx, Ph.D. 0000 Xxxxxxxx Xxxxxx 88,200
Watergate East - 1408-S
Washington, D.C. 20037
Xxxxxx X. Xxxxxxx 1555 Shelford Ct. 20,348
Xxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxxx c/o Precision Auto Care, Inc. 344,779
000 Xxxxxx Xxxxx, X.X.
Xxxxxxxx, Xxxxxxxx 00000
Xxxx X. Xxxxxxx 43289 Hill Head Place 16,250
Xxxxxxxx, Xxxxxxxx 00000-0000
Falcon Solutions, Ltd. Blvd. Xxxx Xxxxx #200 1,824,594
Col. Santa Xxxxx
Monterrey, N.L. CP 64650
Attn: Xxxxxxxx Xxxxxxxx
Xxxxxxxx Xxxxxxxx Blvd. Xxxx Xxxxx #200 3,597
Col. Santa Xxxxx
Monterrey, N.L. CP 64650
EXHIBIT A
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IRREVOCABLE PROXY
The undersigned Shareholder of Precision Auto Care, Inc., a Virginia
corporation (the "Company"), hereby irrevocably appoints Xxxxxx X. Xxxxxxx,
Xxxxxxxxx X. Xxxxxxx and Xxxxxxx Xxxxx, 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, Xxxxxx 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 29, 2002
Signature of Shareholder:
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Print Name of Shareholder:
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***PROXY***
