SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: January 28, 1997
(Date of earliest event reported)
________________________________
ECKLER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
________________________________
Florida 1-14082 59-1469577
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation or
organization)
5200 South Washington Avenue, Titusville, Florida 32780
(Address of principal executive offices, zip code)
(407) 269-9680
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
On January 28, 1997, the Registrant closed the
merger with Smart Choice Holdings, Inc., under a merger
agreement dated December 30, 1996. In respect of the merger,
approximately 3,259,367 restricted shares of Class A Common
Stock and 1,257,389.5 restricted shares of Class B Common Stock
were exchanged for all of the issued and outstanding common stock
of Smart Choice. The Registrant expects to change its name to
Smart Choice Holdings, Inc. in the near future and will maintain
its headquarters in Titusville, Florida. The Registrant will be
reorganized into a holding company that will encompass four
divisions: the Registrant's on-going business of Corvette parts
and accessories; new car sales and used car sales; insurance and
auto finance; and, dealer development services. As a result of
the merger, Registrant is now operating, through its Smart Choice
subsidiary, two used car auto dealerships at three locations, an
auto finance company, and an insurance services company, all of
which are currently located in Florida. The Registrant plans to
continue acquiring throughout the Southeast additional new and
used auto dealerships, and related businesses engaged in auto
finance and insurance. In connection with the merger, the Board
of Directors elected Gary R. Smith as the new President of the
Registrant and Ralph H. Eckler as Chairman of the Corvette parts
and accessories division. In respect of the merger, Mr. Eckler
entered into a new employment agreement with the Company,
relinquished certain stock options, and received a stock option
for 150,000 shares of Class A Common Stock, 100,000 of which are
exercisable at $8.75 per share, and 50,000 of which are
exercisable at $10.00 per share. Additionally, Ronald V. Mohr
resigned from the Board of Directors. The Board increased the
number of directors to six members and elected three additional
directors: Robert J. Abrahams, David E. Bumgardner and Gary R.
Smith.
Item 7. Exhibits.
4.1 Non-Qualified Stock Option Agreement
between Ralph H. Eckler and Registrant dated
January 28, 1977.
4.2 Registration Rights Agreement between
Ralph H. Eckler and the Registrant dated January
28, 1997.
10.1 Merger Agreement dated December 30, 1996
10.2 Executive Employment Agreement between
Ralph H. Eckler and Registrant.
99.1 Press Release dated January 29, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ECKLER INDUSTRIES, INC.
By:/s/ Gary R. Smith
February 11, 1997 President
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INDEX TO EXHIBITS
4.1 Non-Qualified Stock Option Agreement between Ralph H. Eckler
and Registrant dated January 28, 1997.
4.2 Registration Rights Agreement between Ralph H. Eckler and
the Registrant dated January 28, 1997.
10.1 Merger Agreement dated December 30, 1996.
10.2 Executive Employment Agreement between Ralph H. Eckler and
Registrant.
99.1 Press Release dated January 29, 1997.
<PAGE>
Exhibit 4.1 - Non-Qualified Stock Option Agreement between
Ralph E. Eckler and Registrant dated January 28, 1997
THE OPTION AND COMMON STOCK REFERRED TO HEREIN HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, THE FLORIDA
SECURITIES ACT, AS AMENDED, OR THE LAWS OF ANY OTHER STATE, AND
ARE BEING GRANTED PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER
THAT ACT AND SUCH STATE LAWS. OPTIONS OR SHARES OF STOCK
ACQUIRED BY OPTIONEE MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE OPTIONS OR
SHARES OF STOCK UNDER THAT ACT OR SUCH STATE LAWS AS MAY BE
APPLICABLE, OR PURSUANT TO EXEMPTIONS FROM SAID REGISTRATION
UNDER SAID ACT AND SAID LAWS. FURTHER, THIS AGREEMENT CONTAINS
SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY OF THE OPTIONS AND
SHARES OF STOCK.
ECKLER INDUSTRIES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement")
effective as of the _______ day of January, 1997, by and among
ECKLER INDUSTRIES, INC., a Florida corporation (the "Company")
and RALPH H. ECKLER (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has entered into an Agreement and Plan of
Merger with Smart Choice Holdings, Inc. pursuant to which the
Optionee is assigning to the Company certain (a) options and (b)
any claims Optionee may have under that certain employment
agreement dated May 23, 1995, for the options described herein.
NOW, THEREFORE, in consideration of the foregoing recital,
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby
covenant and agree as follows:
1. Grant of Options. Subject to the terms and conditions
set forth in this Agreement, the Company hereby grants to
Optionee, the option to purchase from the Company 100,000 shares
of the Company's Class A Common Stock, $.01 par value ("Common
Stock"), at the exercise price per share of $8.75 per share (the
"$8.75 Option") and 50,000 shares of Common Stock at the exercise
price per share of $10.00 per share (the "$10.00 Option"). The
shares issuable on exercise of the $8.75 Option and the $10.00
Option are referred to herein as the "Option Shares". The $8.75
Option and the $10.00 Option shall be exercisable, in whole or in
part, for a period of five (5) years (the "Exercise Period"),
which period shall commence on the date of execution of this
Agreement. The $8.75 Option and the $10.00 Option are referred
to herein collectively as the "Options". None of the Options are
intended to be "incentive stock options" as defined in Section
422(b) of the Internal Revenue Code.
<PAGE>
2. Termination of the Options.
(a) The Options shall terminate and no longer be
exercisable upon the occurrence of the following:
(i) In accordance with the expiration of the
Exercise Period set forth above;
(ii) Involuntary dissolution of the Company.
(b) Termination in the event of death, disability or
termination of status as an employee.
(i) If Optionee dies while an employee of the
Company or within three (3) months after termination of his
status as an employee because of his permanent disability (as
defined below), his Options may be exercised, to the extent that
the Optionee shall have been entitled to do so on the date of his
death, by the person or persons to whom the Optionee's right
under the Options passes by will or applicable law, or if no such
person has such right, by his executors or administrators, at any
time or from time to time, but not later than the expiration date
specified in Section 1 or three (3) months after Optionee's
death, whichever is earlier.
(ii) If Optionee's status as an employee of the
Company shall terminate because of his total disability, he may
exercise his Option to the extent that he shall have been
entitled to do so at the date of such termination, at any time or
from time to time, but not later than the expiration date
specified in Section 1 or three (3) months after termination of
employment, whichever date is earlier.
(iii) If Optionee's status as an employee of the
Company shall terminate (A) involuntarily other than for cause,
death, or total disability, all rights to exercise his Option, to
the extent that he shall have been entitled to do so at the date
of such termination, shall terminate at the expiration date
specified in Section 1 or three months after termination of
employment, whichever date is earlier.
(iv) If Optionee's status as an employee of the
Company shall terminate for cause (as defined below), all rights
to exercise his Options shall terminate at the date of such
termination.
(c) "Termination for cause" shall be defined as set
forth in the Employment Agreement between Company and Optionee
effective as of December 30, 1996. "Permanent disability" shall
<PAGE>
be defined as set forth in the Employment Agreement between
Company and Optionee effective as of December 30, 1996.
3. Exercise. Optionee (or in the case of Optionee's death
or disability, the legal representative of Optionee) may exercise
the Options only by giving timely notice of the exercise of an
Option prior to the expiration or termination of the Exercise
Period to the Company at 5200 South Washington Avenue,
Titusville, Florida 32780. Such notice shall state the number of
shares to be purchased which are attributable to the Option which
is being exercised, and shall be accompanied by the full purchase
price for such shares, payable in U.S. Dollars by certified check
or bank draft, unless the Company shall permit payment of the
purchase price in another manner.
4. Delivery of Option Shares. As soon as possible after
receipt by the Company of a timely notice of exercise of any of
the Options hereunder, of payment therefor, the Company shall
transfer to Optionee or his Legal Representative(s), as the case
may be, one or more certificate(s) for the number of shares with
respect to which the Options shall have been so exercised.
5. Restrictions upon Transfer.
(a) Neither the Optionee nor any other person or entity
shall have any interest in any specific asset or assets or stock
of the Company by reason of the granting of the Options. Any
attempt to assign or to transfer this Agreement or the Options
granted hereunder, whether voluntarily or involuntarily, by
operation of law or otherwise, shall immediately terminate this
Agreement, all the Options granted hereunder shall be of no
further force or effect and no interest or right hereunder shall
vest in any other person.
(b) Nothing in this Agreement shall be construed in
limitation of any restrictions upon transfer of any of the Option
Shares contained elsewhere, including any restrictions that may
be contained in the Certificate of Incorporation or the By-Laws
of the Company.
(c) Nothing in this Agreement shall be construed as a
modification of any existing agreements with respect to the gift,
sale, purchase, transfer, pledge, hypothecation, or other
disposition or encumbrance of the Option Shares between the
parties to this Agreement, or between or among either or both of
the parties to this Agreement and one or more persons not party
to this Agreement.
<PAGE>
(d) The Optionee acknowledges that the certificate(s)
evidencing ownership of the Common Stock will be stamped or
otherwise imprinted on the face thereof with a legend in
substantially the following form:
"The shares represented by this Certificate
have not been registered under the federal
Securities Act of 1933, as amended (the
"Act") or any state securities act. No
sale, offer to sell or transfer of the shares
shall be made unless a registration statement
under the Act, or any applicable state
statute, with respect to the shares is then
in effect or an exemption from the
registration requirements of such Act or
state statute is then in fact applicable to
the shares."
6. Rights as Stockholder.
(a) Optionee shall have none of the rights of a
stockholder with respect to any of the Option Shares until any
Option granted herein shall have been exercised and until such
respective shares attributable to such Option shall have been
issued to Optionee.
(b) Nothing in this Agreement shall affect in any way
the rights or powers of the Company, or any parent or subsidiary
Company, or any of the directors or stockholders of any of the
Company, to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the
Company's capital structure or business, or any merger or
consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stocks or other classes of
securities ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of the Company's assets or
business, or any grant of options to purchase securities of the
Company otherwise than under this Agreement, or to effect any
other corporate act or proceeding, whether of a similar character
or otherwise.
(c) If the outstanding shares of Common Stock of the
Company are increased, decreased, changed into or exchanged for a
different number or kind of shares or securities of the Company
or of another corporation or entity or shares of a different par
value or without par value through a recapitalization, stock
dividend, stock split, reverse stock split or a reorganization
under which the Company is not the surviving entity, an
<PAGE>
appropriate and proportionate adjustment shall be made in the
number and/or kind of securities allocated to the Options,
without change in the aggregate Option Price applicable to the
unexercised portion of the outstanding Option but with a
corresponding adjustment in the Option Price for each share or
other unit of any security covered by the Option. No adjustment
shall occur under this Section 6 by virtue of the fact that the
Company purchases or sells Common Stock or any securities of the
Company for cash. No fractional shares shall be issued for any
such adjustment.
(d) In the event of the proposed dissolution or
liquidation of the Company, the Company shall cause the Board of
Directors of the Company to notify the Optionee at least fifteen
(15) days prior to such proposed action. To the extent it has
not been exercised during such fifteen (15) day period, these
Options will terminate as to any unexercised portion thereof
immediately prior to the consummation of such proposed action.
7. Representations. Optionee will acquire Optionee's
shares for Optionee's own account, for investment only and
without a view to resale or distribution except in compliance
with the Securities Act of 1933, as amended (the "Act"), and any
applicable state securities laws, and upon the acquisition of the
shares, Optionee will enter into such written representations,
warranties and agreements as the Company may request in order to
comply with the Act, any applicable state securities laws and
this Option Agreement.
8. Reservation. The Company agrees, at all times during the
term of the Options, to reserve and keep available such number of
shares of the Common Stock as will be sufficient to satisfy the
requirements of the Options.
9. Tax Consequences and Withholding. Optionee agrees that
the Company is not responsible for the tax consequences to
Optionee of the granting of the Options or its subsequent
exercise by Optionee, and that it is the responsibility of
Optionee to consult with Optionee's personal tax advisor
regarding all matters with respect to the tax consequences of the
granting of the Options and its exercise by Optionee.
10. General Provisions.
(a) Agreement to be Bound by Contract. This Agreement
shall be binding not only by the parties hereto, but also upon
their heirs, executors, administrators, successors or assigns.
The parties hereto agree for themselves and their heirs,
executors, administrators, successors or assigns, to execute any
<PAGE>
instruments and to perform any acts which may be necessary or
proper to carry out the purposes of this Agreement.
(b) Amendment or Alteration. This Agreement may be
altered or amended, in whole or in part, at any time, only by a
written instrument setting forth such changes signed by all
parties hereto.
(c) Waiver. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party.
(d) Notices. Any notices permitted or required
hereunder shall be delivered to the parties personally, by tele
copier, or by United States Mail, with postage prepaid, certified
or registered, return receipt requested, addressed to the
respective parties at the following addresses and telecopier
numbers:
If to Company: Eckler Industries, Inc.
5200 South Washington Avenue
Titusville, FL 32780
Telecopier: (407)
269-9680
If to Optionee: Ralph H. Eckler
5200 South Washington Avenue
Titusville, FL 32780
or such other address as either party hereto shall notify the
other as provided herein. The date of service of any notice or
communication hereunder shall be the date of the hand delivery or
receipt of telecopy, or three (3) days after the mailing, if
mailed by certified mail, return receipt requested.
(e) Validity. In the event that any provision of this
Agreement shall be held to be invalid, the same shall not effect,
in any respect, the validity of the remainder of this Agreement.
(f) Integrated Agreement. This Agreement and all
agreements executed in accordance with the terms hereof
constitute the entire understanding and agreement among the
parties hereto with respect to the subject matter hereof, and
there are no agreements, understandings, restriction,
representations or warranties among the parties other than those
set forth herein.
(g) Attorneys' Fees. In the event any litigation
including any appeals, is instituted in connection with the
breach, enforcement or interpretation of this Agreement,
including, without limitation, any action seeking declaratory
<PAGE>
relief, equitable relief, injunctive relief, or damages, the
prevailing party shall be entitled to recover from the non-
prevailing party all costs, expenses and attorneys' fees incurred
in connection therewith, including any costs of collection.
(h) State Law Governing Contracts. This Agreement
shall be governed by the laws of the State of Florida.
(i) No Construction Against Drafting Party. Each
party to this Agreement expressly recognizes that it results from
a negotiated process in which each party was given the
opportunity to consult with counsel and contributed to the
drafting of this Agreement. Given this fact, no legal or other
presumptions against the party drafting this Agreement concerning
its construction, interpretation or otherwise accrue to the
benefit of any party to this Agreement and each party expressly
waives the right to assert such a presumption in any proceedings
or disputes connected with, arising out of, or involving this
Agreement.
[THIS AREA INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Non-
Qualified Stock Option Agreement under seal as of the date first
above written.
THE COMPANY:
ECKLER INDUSTRIES, INC.
By:
Print Name:
As Its:
OPTIONEE:
Ralph H. Eckler
SS#:
<PAGE>
Exhibit 4.2 - Registration Rights Agreement between Ralph H. Eckler
and the Registrant dated January 28, 1997.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is entered into by ECKLER INDUSTRIES, INC., a Florida
corporation (the "Company"), and RALPH H. ECKLER (the
"Holder").
R E C I T A L S:
WHEREAS, the Holder, the Company and certain other
parties have entered into an Agreement and Plan of Merger
providing for the merger (the "Merger") of Smart Choice
the Company and the issuance of shares of the Company in
exchange for the outstanding shares of SCHI; and
WHEREAS, in connection with the Merger, the Company
desires to grand the Holder the registration rights set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein, the Company and the
Holder hereby agree as follows:
1. Certain Definitions. As used in this Agreement,
the following capitalized terms shall have the following
meanings:
"Commission" shall mean the Securities and
Exchange Commission.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
"Registrable Stock" shall mean shares of the
Company's common stock, par value $.001 per share (the
"Common Stock") as follows: (i) 100,000 shares of Common
Stock on the date of this Agreement and (ii) 50,000 shares
of Common Stock for each calendar quarter thereafter up to a
maximum of four calendar quarters.
"Securities Act" shall mean the Securities Act of
1933, as amended.
2. "Piggyback" Registration. If the Company at any
time after the date of this Agreement proposes to register
any of its securities under the Securities Act (other than
in connection with a merger or pursuant to Form S-8 or other
comparable form not available for registering the
Registrable Stock for sale to the public), the Company shall
request that the managing underwriter (if any) of such stock
offering include the Registrable Stock in the registration
statement for the public offering in such registration. If
such managing underwriter agrees to include the Registrable
Stock in the registration statement relating to such stock
offering, the Company shall at such time give prompt written
notice to the Holder of its intention to effect such
registration and of the Holders' right under such proposed
registration, and upon the request of the Holder delivered
<PAGE>
to the Company within twenty (20) days after giving such
notice (which request shall specify the Registrable
Securities intended to be disposed of by the Holder), the
Company shall include such Registrable Securities held by
the Holder requested to be included in such registration;
provided, however, that:
(i) If, at any time after giving such
written notice of the Company's intention to register any of
the Holders' Registrable Stock and prior to the effective
date of the registration statement filed in connection with
such registration, the Company shall determine for any
reason not to file the registration statement wherein the
Registrable Stock are being registered or to delay the
registration of such Registrable Stock, at its sole
election, the Company may give written notice of such
determination to the Holder and thereupon shall be relieved
of its obligation to register any Registrable Stock in
connection with such registration (but not from its
obligation to pay registration expenses in connection
therewith or to register the Registrable Stock in a
subsequent registration); and in the case of a determination
to delay a registration, the Company shall thereupon be
permitted to delay registering any Registrable Stock for the
same period as the delay in respect of securities being
registered for the Company's own account.
(ii) If the managing underwriter in such a
stock offering shall advise the Company that it declines to
include a portion or all of the Registrable Stock requested
by the Holder to be included in the registration statement,
then distribution of all or a specified portion of the
Registrable Stock shall be excluded from such registration
statement. In such event the Company shall give the Holder
prompt notice of the number of shares of Registrable Stock
excluded from such registration at the request of the
managing underwriter. No such exclusion shall reduce the
securities being offered by the Company for its own account
to be included in such registration statement.
(b) Option to Include Registrable Stock in
Offering. The Holder, subject to the provisions of Section
2, shall have the option to include his Registrable Stock in
the registration statement, relating to such stock offering.
The Company shall not be required to include any of the
Holder's Registrable Stock in the registration statement
relating to an underwritten offering of the Company's
securities unless the Holder accepts the terms of the
underwriting as agreed upon between the Company and the
underwriters selected by it (provided such terms are usual
and customary for selling stockholders) and the Holder
agrees to execute and/or deliver such documents in
connection with such registration as the Company or the
managing underwriter may reasonably request.
(c) The Company may, in its sole discretion and
without the consent of the Holder, withdraw such
registration statement and abandon the proposed offering in
which the Holder had requested to participate, but such
abandonment shall not preclude subsequent request for
registration pursuant to Section 2.
3. Expiration of Registration Rights. The
obligations of the Company to register shares of the
Registrable Stock under Sections 2 of this Agreement, shall
<PAGE>
terminate one (1) year after the date hereof, unless such
obligations terminate earlier in accordance with the terms
of this Agreement.
4. Cooperation with Company. The Holder will
cooperate with the Company in all respects in connection
with this Agreement, including, without limitation, timely
supplying all information reasonably requested by the
Company and executing and returning all documents reasonably
requested in connection with the registration and sale of
the Registrable Stock.
5. Registration Procedures. If and whenever the
Company is required by any of the provisions of this
Agreement to use its reasonable best efforts to effect the
registration of any shares of Registrable Stock under the
Securities Act, the Company shall (except as otherwise
provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the Commission a
registration statement and shall use its reasonable best
efforts to cause such registration statement to become
effective and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter
provided);
(b) prepare and file with the Commission such
amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for
the period specified in paragraph (a) and to comply with the
provisions of the Securities Act with respect to the sale or
other disposition of all Registrable Stock covered by such
registration statement in accordance with the sellers'
intended method of disposition set forth in such
registration statement for such period;
(c) furnish to each seller of Registrable Stock
such number of copies of a summary prospectus or other
prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity
with the requirements of the Securities Act, and such other
documents, as such persons may reasonably request in order
to facilitate the public sale or other disposition of the
Registrable Stock covered by such registration statement;
(d) use its reasonable best efforts to register
and qualify the Registrable Stock covered by such
registration statement under such other securities laws or
"blue sky" laws of such jurisdictions as the sellers of the
Registrable Stock or, in the case of an underwritten stock
offering, the managing underwriter, reasonably shall
request, and do any and all other acts and things which may
be necessary or advisable to enable such seller of
Registrable Stock to consummate the public sale or other
disposition in such jurisdiction of the Registrable Stock
owned by such seller, except that the Company shall not for
any such purpose be required to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so
qualified or to file therein any general consent to service
of process; or take any other actions or submit itself or
<PAGE>
its directors or officers or any resolutions, obligations or
burdens having a material adverse economic effect on it or
them.
(e) use its reasonable best efforts to list the
Registrable Stock covered by such registration statement
with any securities exchange on which the Common Stock of
the Company is then listed, if the listing of such
securities is then permitted under the rules of such
exchange; and
(f) promptly notify each seller of Registrable
Stock and each underwriter under such registration
statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as
a result of which the prospectus included in such
registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of
the circumstances then existing.
For purposes of Section 5(a) and 5(b) hereof, the
period of distribution of Registrable Stock in an
underwritten offering shall be deemed to extend until each
underwriter has completed the distribution of all securities
purchased by it, and the period of distribution of
Registrable Stock in any other registration shall be deemed
to extend until the earlier of the sale of all Registrable
Stock covered thereby or eighteen (18) months after the
effective date thereof.
In connection with each registration hereunder, the
sellers of Registrable Stock will furnish to the Company in
writing such information with respect to themselves and the
proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and
applicable state securities laws.
In connection with each registration covering an
underwritten offering, the Company and each seller agree to
enter into a written agreement with the managing underwriter
containing such provisions as are customary in the
securities business for such an arrangement between such
underwriter and companies of the Company's size and
investment stature.
6. "Lock-Up" Agreement. The Holder hereby agrees not
to sell, transfer, assign, hypothecate or otherwise dispose
of any of the Common Stock (or other securities) of the
Company held by him for 90 days after the closing of any
transaction in which Registrable Stock of the Holder is
registered and sold pursuant to the terms of this Agreement.
7. Expenses. All expenses incurred by the Company in
complying with the provisions of this Agreement, including,
without limitation, all registration and filing fees,
printing expenses, fees and disbursements of Company counsel
and independent public accountants for the Company, fees and
expenses (including counsel fees) incurred in connection
with complying with state securities or "blue sky" laws,
<PAGE>
fees of the National Association of Securities Dealers,
Inc., transfer taxes, fees of transfer agents and registrars
and costs of insurance, but excluding any Selling Expenses
and expenses of counsel for the Holder, are called
"Registration Expenses". All underwriting discounts,
selling commissions and underwriter expense reimbursement
allowances applicable to the sale of Registrable Stock, as
well as all fees and expenses of counsel for the Holder, are
called "Selling Expenses".
The Company will pay all Registration Expenses in
connection with each registration of Registrable Stock
pursuant to the provisions of this Agreement. All Selling
Expenses in connection with each such registration statement
shall be borne by the Holder.
8. Indemnification and Contribution.
(a) Company Indemnity. In the event of a
registration of any of the Holder's Registrable Stock under
the Securities Act pursuant to the provisions of this
Agreement, the Company shall indemnify and hold harmless, to
the extent permitted by law, the Holder, each underwriter of
such Registrable Stock thereunder and each other person, if
any, who controls such seller or underwriter within the
meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such
seller, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any registration statement under which such
Registrable Stock was registered under the Securities Act
pursuant to the provisions of this Agreement, any
preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
and will reimburse each such seller, each such underwriter
and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided that the Company will not be
liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based
upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with
information furnished by any such seller, any such
underwriter or any such controlling person in writing
specifically for use in such registration statement or
prospectus; or (ii) such Holder's failure to deliver a copy
of the final prospectus as then amended or supplemented
after the Company has furnished such Holder with a
sufficient number of copies of the same, but only if
delivery of same is required by law and the same would have
cured the defect giving rise to any such loss, claim,
damage, liability or expense..
(b) Holder Indemnity. In the event of a
registration of any of the Registrable Stock under the
Securities Act pursuant to the provisions of this Agreement,
the Holder will indemnify and hold harmless the Company,
each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company
<PAGE>
who signs the registration statement, each director of the
Company, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or
several, to which the Company or such officer, director,
underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement under which such Registrable
Stock was registered under the Securities Act pursuant to
the provisions of this Agreement, any preliminary prospectus
or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and
controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating
or defending any such loss, claim, damages, liability or
action; provided that the Holder will be liable hereunder in
an amount not to exceed the net proceeds received by the
Holder in the sale of his Registrable Stock pursuant to such
registration statement and, in any such case, if and only to
the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with information
pertaining to the Holder furnished in writing to the Company
by the Holder specifically for use in such registration
statement or prospectus.
(c) Notice; Right to Defend. Promptly after
receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party,
in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any such
liability other than under this Section 7 and shall only
relieve it from any liability which it may have to such
indemnified party if such indemnifying party is prejudiced
by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and,
to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such
indemnified party, and after notice from the indemnifying
party to such indemnified party under this Section 8 to such
effect, the indemnifying party shall not be liable for any
legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with
counsel so selected; provided that if the defendants in any
such action include both the indemnified party and the
indemnifying party and the indemnified party shall have
reasonably concluded that there may be reasonable defenses
available to it which are different from or additional to
those available to the indemnifying party, the indemnified
party shall have the right to select a separate counsel and
to assume such legal defenses and otherwise participate in
the defense of such action, with the expenses and fees of
such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as
incurred.
<PAGE>
(d) Contribution. In order to provide for just
and equitable contribution to joint liability under the
Securities Act in any case in which either (i) the Holder
makes a claim for indemnification pursuant to this Section 8
but it is judicially determined (by entry of a final
judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this
Section 8 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the
part of the Holder in circumstances for which
indemnification is provided under this Section 8, then, and
in each such case, the Company and the Holder will
contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution
from others) in such proportion so that the Holder is
responsible for the portion represented by the percentage
that the public offering price of its Registrable Stock
offered by the registration statement bears to the public
offering price of all securities offered by such
registration statement (in an amount in any case not to
exceed the net proceeds received by the Holder in the sale
of his Registrable Stock pursuant to such registration
statement), and the Company is responsible for the remaining
portion; provided that, in any such case, no person or
entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be
entitled to contribution from any person or entity who was
not guilty of such fraudulent misrepresentation.
9. Rule 144 Reporting. With a view to making
available the benefits of certain rules and regulations of
the Commission which may at any time permit the sale of the
Registrable Stock to the public without registration, at all
times after 90 days after any registration statement
covering a public offering of securities of the Company
under the Securities Act shall have become effective, the
Company agrees to:
(a) make and keep public information available,
as those terms are understood and defined in Rule 144 under
the Securities Act;
(b) use its best efforts to file with the
Commission in a timely manner all reports and other
documents required of the Company under the Securities Act
and the Exchange Act; and
(c) furnish to the Holder forthwith upon request
a written statement by the Company as to its compliance with
the reporting requirements of Rule 144 and of the Securities
Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the Company, and such other reports
and documents so filed by the Company as such Holder may
reasonably request in availing itself of any rule or
regulation of the Commission allowing the Holder to sell any
Registrable Stock without registration.
10. Successors and Assigns. The rights of the Holder
granted under this Agreement, including the rights to cause
the Company to register the Registrable Stock, may not be
assigned without the prior written consent of the Company.
<PAGE>
Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be
binding upon, the successors and permitted assigns of the
Company and the Holder.
11. Entire Agreement. This Agreement expresses the
entire understanding of the Company and the Holder with
respect to the subject matter of this Agreement. Nothing in
this Agreement shall alter, amend, modify, delete, rescind
or otherwise waive any terms or conditions to which the
Holder, or the securities held by such Holder, may be
subject.
12. Notices. All notices, requests, consents and
other communications hereunder shall be in writing and shall
be mailed by certified or registered mail, return receipt
requested, postage prepaid, or telexed with confirmation of
receipt, or delivered by hand or by a nationally recognized
overnight delivery service, addressed as follows:
(a) If to the Company, at:
SMART CHOICE HOLDINGS, INC.
5200 South Washington Avenue
Titusville, FL 32780
Attention: James Neal Hutchinson, Jr.
General Counsel
or at such other address or addresses as shall have been
furnished in writing to the Holder, or
(b) If to the Holder, to the address of the
Holder as it appears in the stock ledger of the Company.
(c) Any notice so addressed, when mailed by
registered or certified mail shall be deemed to be given
three days after so mailed, when telexed shall be deemed to
be given when transmitted, or when delivered by hand or
overnight shall be deemed to be given when delivered.
13. Amendment and Waiver. This Agreement may be
amended, and the observance of any term of this Agreement
may be waived, but only with the written consent of the
Company and the Holder.
14. Governing Law. This Agreement shall be construed
in accordance with and governed by the internal, substantive
laws of the State of Florida, without giving effect to the
conflicts of law principles thereof.
15. Invalidity of Provisions. If any provisions of
this Agreement shall be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected
thereby.
<PAGE>
16. Headings. The headings in this Agreement are for
purposes of reference only and shall not be deemed to alter
or affect the meaning or interpretation of any of the
provisions of this Agreement.
17. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute
one and the same instrument.
[THIS AREA INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this
Agreement as of the ____ day of ______________, 1996.
The Company:
ECKLER INDUSTRIES, INC.,
a Florida corporation
By:_______________________________________
Name:____________________________________
Title:_____________________________________
The Holder:
__________________________________________
Ralph H. Eckler
<PAGE>
Exhibit 10.1 - Merger Agreement dated December 30, 1996.
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ECKLER INDUSTRIES, INC.,
ECKLER ACQUISITION CORPORATION,
RALPH ECKLER
AND
SMART CHOICE HOLDINGS, INC.,
THOMAS E. CONLAN,
GERALD C. PARKER
<PAGE>
TABLE OF CONTENTS
RECITALS
1. THE MERGER 2
1.1 THE MERGER 2
1.2 EFFECTIVENESS OF THE MERGER 2
1.3 EFFECT OF THE MERGER 2
1.4 SURVIVING CORPORATION 3
1.5 STATUS AND CONVERSION OF THE COMPANY'S SHARES AND THE
POTENTIAL SECURITIES 3
1.6 BOOKS AND RECORDS 4
1.7 DEFINITIONS 5
2. COMPANY SHAREHOLDERS' AGREEMENTS 5
2.1 INVESTMENT INTENT AND DISCLOSURE 5
3. RALPH ECKLER'S CONSIDERATION AND OBLIGATIONS 5
3.1 SURRENDER OF WARRANT AND OPTION RIGHTS 5
3.2 NEW EMPLOYMENT AGREEMENT FOR SHAREHOLDERS 5
3.3 RALPH ECKLER'S REGISTRATION RIGHTS 6
3.4 RALPH ECKLER GUARANTIES AND INDEMNIFICATION 6
4. FURTHER ASSURANCES 7
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
5.1 TITLE TO THE STOCK 7
5.2 VALID AND BINDING AGREEMENT 7
5.3 ORGANIZATION, GOOD STANDING AND QUALIFICATION 8
5.4 CAPITAL STRUCTURE; STOCK OWNERSHIP 8
5.5 SUBSIDIARIES AND INVESTMENTS 9
5.6 FINANCIAL INFORMATION 9
5.7 NO MATERIAL CHANGES 9
5.8 TAX MATTERS 10
5.9 PERSONAL PROPERTY; LIENS 11
5.10 REAL PROPERTY 12
5.11 ACCOUNTS RECEIVABLE 12
5.12 INVENTORIES 12
5.13 INSURANCE POLICIES 12
5.14 PERMITS AND LICENSES 13
5.15 CONTRACTS AND COMMITMENTS 13
5.16 CUSTOMERS AND SUPPLIERS 14
5.17 LABOR, BENEFIT AND EMPLOYMENT AGREEMENT 14
5.18 NO BREACH OF STATUTE, DECREE OR OTHER INSTRUMENT 15
5.19 COMPLIANCE WITH LAWS 16
5.20 LITIGATION 16
5.21 PATENTS, LICENSES AND TRADEMARKS 17
5.22 TRANSACTIONS WITH AFFILIATES 17
5.23 BANK ACCOUNTS 17
5.24 SCHEDULES INCORPORATED BY REFERENCE 17
5.25 NO CONSENTS 17
5.26 CONDITION OF ASSETS 18
5.27 OTHER INFORMATION 18
6. REPRESENTATIONS AND WARRANTIES OF ECKLER AND MERGER SUBSIDIARY
18
6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION 18
6.2 AUTHORIZATION OF AGREEMENT 19
6.3 VALID AND BINDING AGREEMENT 19
6.4 NO BREACH OF STATUTE OR CONTRACT 19
6.5 BUSINESS AND FINANCIAL INFORMATION 19
6.6 ECKLER SHARES 20
6.7 INVESTMENT 20
6.8 TAX MATTERS 20
6.9 OTHER INFORMATION 21
7. THE COMPANY'S OBLIGATIONS BEFORE THE CLOSING DATE 21
7.1 ACCESS TO INFORMATION 21
7.2 CONDUCT OF BUSINESS IN NORMAL COURSE 22
7.3 PRESERVATION OF BUSINESS AND RELATIONSHIPS 22
7.4 MAINTENANCE OF INSURANCE; ASSETS AND RECORDS 22
7.5 CORPORATE MATTERS 22
7.6 OTHER TRANSACTIONS 23
8. ADDITIONAL AGREEMENTS OF THE PARTIES 24
8.1 CONFIDENTIALITY 24
8.2 DUE DILIGENCE INVESTIGATION 24
8.3 ADDITIONAL AGREEMENTS AND INSTRUMENTS 24
8.4 NON-INTERFERENCE 25
8.5 MANAGEMENT OF THE SURVIVING CORPORATION AND ECKLER
FOLLOWING THE CLOSING DATE 25
9. CONDITIONS PRECEDENT TO ECKLER'S PERFORMANCE 26
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES 26
9.2 PERFORMANCE 26
9.3 CERTIFICATION 26
9.4 RESOLUTIONS 26
9.5 GOOD STANDING CERTIFICATES 26
9.6 ABSENCE OF LITIGATION 26
9.7. CONSENTS 27
9.8 CONDITION OF PROPERTY 27
9.9 NO MATERIAL ADVERSE CHANGE 27
9.10 SATISFACTORY DUE DILIGENCE INVESTIGATION 27
9.11 EXECUTION AND DELIVERY OF EXHIBITS 27
9.12 PROCEEDINGS AND INSTRUMENTS SATISFACTORY 27
9.13 CONSUMMATION OF ACQUISITIONS 27
9.14 INVESTMENT BANKING FAIRNESS OPINION 28
9.15 BARNETT BANK OF CENTRAL FLORIDA, N.A.'S CONSENT TO THE
MERGER 28
9.16 EXECUTIVE EMPLOYMENT AGREEMENTS 28
10. CONDITIONS PRECEDENT TO THE COMPANY'S PERFORMANCE 28
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES 28
10.2 PERFORMANCE 28
10.3 CERTIFICATION 28
10.4 RESOLUTIONS 29
10.5 EXECUTION AND DELIVERY OF EXHIBITS 29
10.6 PROCEEDINGS AND INSTRUMENTS SATISFACTORY 29
10.7 PERFORMANCE BY RALPH ECKLER 29
10.8 NO MATERIAL ADVERSE CHANGE 29
10.9 APPROVAL OF EMPLOYMENT AGREEMENTS 29
11. CONDITIONS PRECEDENT TO RALPH ECKLER'S PERFORMANCE 29
11.1 DELIVERY OF AGREEMENTS 29
12. CLOSING 29
12.1 PLACE AND DATE OF CLOSING 29
12.2 ACTIONS AT CLOSING 30
13. TERMINATION OF AGREEMENT 30
13.1 GENERAL 30
13.2 EFFECT OF TERMINATION 30
14. INDEMNIFICATION 31
14.1 GENERAL 31
14.2 LIMITATIONS ON CERTAIN INDEMNITY 31
14.3 CLAIMS FOR INDEMNITY 32
14.4 RIGHT TO DEFEND 32
15. POST-CLOSING EVENTS 33
15.1 ACCOUNTING COOPERATION 33
16. COSTS 33
16.1 FINDER'S OR BROKER'S FEES 33
16.2 EXPENSES 33
17. PARTIES 33
17.1 PARTIES IN INTEREST 33
17.2 NOTICES 34
18. MISCELLANEOUS 35
18.1 AMENDMENTS AND MODIFICATIONS 35
18.2 NON-ASSIGNABILITY; BINDING EFFECT 35
18.3 SEVERABILITY 35
18.4 ATTORNEYS' FEES 35
18.5 GOVERNING LAW; JURISDICTION 35
18.6 EFFECT OF HEADINGS 35
18.7 ENTIRE AGREEMENT; WAIVERS 36
18.8 COUNTERPARTS 36
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), entered
into as of this _____ day of ________________, 1996, by and among
ECKLER INDUSTRIES, INC., a Florida corporation having offices at
5200 South Washington Avenue, Titusville, Florida 32780
("Eckler"); 21ECKLER ACQUISITION CORPORATION, a Delaware
corporation having offices at c/o National Corporate Research,
Ltd., 9 East Loockerman Street, Dover, Delaware 19901 (the
"Merger Subsidiary"); RALPH ECKLER, an individual residing in
Brevard County at c/o 5200 South Washington Avenue, Titusville,
Florida 32780 ("Ralph Eckler"); 21STSMART CHOICE HOLDINGS, INC.,
a Delaware corporation, having offices at 101 Phillippe Parkway,
Suite 300, Safety Harbor, Florida 34695 (the "Company"); THOMAS
E. CONLAN, an individual residing in Orange County at 101
Phillippe Parkway, Suite 300, Safety Harbor, Florida 34695
("Thomas Conlan"); and GERALD C. PARKER, an individual residing
in Pinellas County at c/o 101 Phillippe Parkway, Suite 300,
Safety Harbor, Florida 34699 ("Gerald Parker").
W I T N E S S E T H:
WHEREAS, Eckler, one of the largest aftermarket suppliers of
Corvette automobile parts and accessories in the United States,
seeks to expand and diversify its business; and
WHEREAS, the Company has been formed to engage primarily in
the business of the financed sales of new and used motor vehicles
in the Southeastern United States; and
WHEREAS, Eckler, desiring to acquire the Company, has formed
the Merger Subsidiary, a wholly-owned subsidiary of Eckler, which
Merger Subsidiary will statutorily merge with and into the
Company (such merger being referred to herein as the "Merger")
and thereby vest title in all of the outstanding shares of the
Company in the name of Eckler, making the Company a wholly-owned
subsidiary of Eckler at Closing (as hereinafter defined),
pursuant to and in accordance with the terms and conditions of
this Agreement; and
WHEREAS, Eckler's capital structure is as set forth in
Schedule 6.1, attached hereto and incorporated herein ; and
WHEREAS, the Company's capital structure is as set forth in
Schedule 5.1 and Schedule 5.4, attached hereto and incorporated
herein; and
WHEREAS, the Merger shall constitute an "A" Reorganization
structured as a "reverse subsidiary merger" pursuant to Section
368(a)(2)(E) of the Internal Revenue Code, as amended; and
<PAGE>
WHEREAS, the Board of Directors and the stockholders of the
Company, the Board of Directors of Eckler and the Board of
Directors of the Merger Subsidiary and Eckler, as sole
shareholder of the Merger Subsidiary, have all authorized and
approved the Merger and the consummation of the other
transactions contemplated by this Agreement, all on the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein set forth, the parties
hereby covenant and agree as follows:
1. THE MERGER.
1.1 The Merger. At the time of the Closing on the
Closing Date (as hereinafter defined) and in accordance with the
provisions of this Agreement and the applicable provisions of the
corporation laws of the jurisdiction in which the Merger is to
take place (in such instance, "Applicable Law"), the Merger
Subsidiary shall be merged with and into the Company, in
accordance with the terms and conditions of this Agreement and a
certificate of merger in substantially the form of Exhibit A
annexed hereto, subject to such changes as to form (but not
substance) as may be required by Applicable Law, hereinafter
referred to as the "Certificate of Merger". The Company shall be
the surviving corporation of the Merger (the Company, in such
capacity, being hereinafter sometimes referred to as the
"Surviving Corporation"). Thereupon, the separate existence of
the Merger Subsidiary shall cease, and the Company, as the
Surviving Corporation, shall continue its corporate existence
under Applicable Law under its current name, as a wholly-owned
subsidiary of Eckler.
1.2 Effectiveness of the Merger. As soon as
practicable upon or after the satisfaction or waiver of the
conditions precedent set forth in Sections 9, 10 and 11 below,of
this Agreement, the Merger Subsidiary and the Company will
execute an appropriate Certificate of Merger, and shall file or
cause to be filed such Certificate of Merger with the Secretary
of State of the jurisdiction in which the Merger Subsidiary and
Company are incorporated; and the subject Merger shall become
effective as of the date set forth in the Certificate of Merger,
and the Closing shall be deemed to occur as of the date set forth
in Section 12 of this Agreement.
1.3 Effect of the Merger. Upon the effectiveness of
the Merger, (a) the Surviving Corporation shall own and possess
all assets and property of every kind and description, and every
interest therein, wherever located, and all rights, privileges,
immunities, powers, franchises and authority of a public as well
as of a private nature, of the Merger Subsidiary and Company (the
"Constituent Corporations"), and all obligations owed to,
belonging to or due to each of the Constituent Corporations, all
of which shall be vested in the Surviving Corporation pursuant to
<PAGE>
Applicable Law without further act or deed, and (b) the Surviving
Corporation shall be liable for all claims, liabilities and
obligations of the Constituent Corporations, all of which shall
become and remain the obligations of the Surviving Corporation
pursuant to Applicable Law without further act or deed.
1.4 Surviving Corporation. Upon the effectiveness of
the Merger, the Certificate of Incorporation and By-Laws of the
Surviving Corporation shall be identical to those of the Company
as in effect immediately prior to the effectiveness of such
Merger. The directors and officers of both the Surviving
Corporation and Eckler shall be modified on or after the Closing
Date in accordance with Section 8.5 hereafter.
1.5 Status and Conversion of the Company's Shares and
the Potential Securities. Upon the effectiveness of the Merger:
(a) Each share of capital stock held by the
Company as treasury stock immediately prior to the effectiveness
of the Merger shall be canceled and extinguished, and no payment
or issuance of any consideration shall be payable or shall be
made in respect thereof;
(b) Each share of common stock of the Merger
Subsidiary outstanding immediately prior to the effectiveness of
the Merger shall be converted into and shall become one (1) share
of common stock of the Surviving Corporation; and
(c) Each share of $.001 par value common stock of
the Company (the "Company Stock") issued and outstanding
immediately prior to the effectiveness of the Merger (excluding
any shares as to which dissenters' appraisal rights have been
validly exercised and perfected and for which cash is payable in
accordance with applicable law) shall be canceled and
extinguished and converted into the right to receive one (1)
share of Eckler Class A Common Stock, $.01 par value ("Eckler
Class A Common"); provided, however that with respect to the
shares of Company Stock held by Thomas Conlan and the shares of
Company Stock held by Gerald Parker (in lieu of the aforesaid one
for one stock exchange) there shall be delivered one-half of one
(1) share of Eckler Class B Common Stock, $.01 par value ("Eckler
Class B Common") for each such share of Company Stock.
Notwithstanding any other provision in this Agreement Eckler
shall issue nor more than 6,500,000 shares of Eckler Class A
Common or its equivalent, taking into account the outstanding
shares of Company Stock and options, warrants, subscription
rights, Convertible Securities, Exercisable Securities and all
other agreements by which the Company has agreed to issue shares
of Company capital stock; provided, however, that no options,
warrants or rights to acquire shares of the Company Stock that
vest or are exercisable subsequent to a secondary offering of the
Company's or Eckler's securities shall be taken into account.
Eckler Class A Common and Eckler Class B Common are hereinafter
collectively sometimes called "Eckler Stock". Such consideration
<PAGE>
shall be paid and delivered to the holders of all of the
outstanding Company Stock, upon surrender to the Surviving
Corporation of the certificates representing such shares of
outstanding Company Stock at the time and place of the Closing as
provided in Section 12 belowof this Agreement.
(d) Each share of Company Stock that may be
acquired upon the conversion of the Convertible Securities (as
hereinafter defined), or upon exercise of the Exercisable
Securities (as hereinafter defined) (the Convertible Securities
and the Exercisable Securities hereinafter sometimes referred to
collectively as the "Potential Securities"), whether or not such
Potential Securities are contingent, vested, or issued and
outstanding immediately prior to the effectiveness of the Merger,
shall be modified and converted into a right to receive the same
amount of Eckler Class A Common as the holders of the number of
shares of Company Stock deliverable upon such conversion or
exercise would have been entitled to receive if such conversion
were to have occurred prior to the Merger in lieu of the Company
Stock, on the same terms and conditions as originally agreed to
between the Company and the holders of such Potential Securities,
pursuant to this Agreement. Such consideration payable upon
conversion or exercise of the Potential Securities shall be
reserved by Eckler for issuance to the holders of such Potential
Securities in accordance with the terms of such Potential
Securities, provided, however that for each one (1) share of
Company Stock issuable upon conversion or exercise of such
Potential Security the holder thereof shall receive instead and
in lieu thereof one (1) share of Eckler Class A Common Stock.
The term "Convertible Securities" shall mean the Company's Series
A Convertible Preferred Stock, Series B Convertible Preferred
Stock and the 12% Convertible Debentures identified in Exhibit B
attached hereto (said Exhibit B identifying the holders of the
Convertible Securities and the amount of Company Stock
exercisable therefor). The term "Exercisable Securities" shall
mean the Company's stock options or any warrants, as further
identified in Exhibit C (said Exhibit C identifying the option
and/or warrant holders and the amount of Company Stock
exercisable therefor), attached hereto.
1.6 Books and Records. On the Closing Date, the board
of directors of the Company shall direct its officers to deliver
to Eckler all of the stock books, records and minute books of the
Company, all financial and accounting books and records of the
Company, all tax returns and records of the Company, and all
supplier, client, customer, sales and other business records of
the Company.
1.7 Definitions.
(a) Wherever used in this Agreement, the term
"Affiliate" means, as respects any person or entity, any other
person or entity that directly, or indirectly through one or more
<PAGE>
intermediaries, controls, is controlled by, or is under common
control with the first person or entity.
2. COMPANY STOCKHOLDERS' AGREEMENTS.
2.1 Investment Intent and Disclosure. Each
shareholder entitled to receive Eckler Class A Common or Eckler
Class B Common shall be bound by the terms of the Merger to
execute and deliver to Eckler an Agreement that concerns, among
other things, stockholders' investment intent and acknowledgment
of (i) disclosure made by Eckler and (ii) transfer restrictions
on the Eckler Stock. Such agreement shall be in a form mutually
agreeable to the parties and the form shall be attached hereto as
Exhibit D at Closing.
3. RALPH ECKLER'S CONSIDERATION AND OBLIGATIONS.
3.1 Assignment of Warrant and Option Rights. At the
Closing and except as set forth below, Ralph Eckler shall assign
any and all warrants or options of Eckler that he holds, as
identified in Exhibit E attached hereto, and relinquish any and
all contracts rights related thereto. In exchange for the
assignment of the aforementioned warrants and options, Ralph
Eckler shall accept the issuance of 5-year options to acquire
100,000 shares of Eckler Class A Common at $8.75 per share and 5-
year options to acquire 50,000 shares of Eckler Class A Common at
$10.00 per share (the "Ralph Eckler Options") in the form
attached hereto as Exhibit F. Notwithstanding the foregoing,
Ralph Eckler shall be entitled to retain the options and warrants
specifically identified in Exhibit G, attached hereto.
3.2 New Employment Agreements for Ralph Eckler. Upon
Closing, Ralph Eckler's employment agreement with Eckler shall
be, by mutual consent of Eckler and Ralph Eckler (as evidenced by
this Agreement), terminated and deemed to be of no further force
and effect. A new employment agreement between Eckler and Ralph
Eckler (the "Employment Agreement") shall be executed, in
substantially the same form as Exhibit H attached hereto,
employing Ralph Eckler as the chairman of the business unit that
shall conduct the operations customarily conducted by Eckler
prior to the Merger. Upon execution of this Agreement by Ralph
Eckler, he shall be deemed to have made a knowing and voluntary
waiver of his right to convert any and all of his Class B Stock
to Class A Stock, until such time as there is sufficient Class A
Stock available to permit such a conversion.
3.3 Ralph Eckler's Registration Rights. Subject to a
registration rights agreement dated even herewith (the "Ralph
Eckler Registration Agreement"), a true and accurate copy of
which is attached hereto as Exhibit I, Ralph Eckler shall be
permitted to sell, in accordance with all applicable laws or
regulations governing the sale of such securities, up to 100,000
shares of Eckler Stock in any public offering of Eckler Stock
following the Merger. Additionally, Ralph Eckler, subject to
<PAGE>
Ralph Eckler's Registration Agreement, shall be permitted to sell
an additional 200,000 shares, pursuant to securities laws and
regulations applicable to such securities, in installments of up
to 50,000 shares of the Eckler Stock during each three (3) month
period thereafter, for a period not to exceed twelve (12) months.
3.4 Ralph Eckler Guaranties and Indemnification.
Ralph Eckler currently guarantees, on behalf of Eckler, certain
loans as more particularly identified in Exhibit J attached
hereto (the "Loans"). In consideration for Ralph Eckler's
guaranties, Eckler pays to Ralph Eckler a quarterly fee in an
amount equal to two percent (2%) of the outstanding balance of
the Loans in accordance with Section 4 of the employment
agreement between Ralph Eckler and Eckler dated May 23, 1995, and
as subsequently amended (the "Guaranty & Employment Agreement"),
a copy of the Guaranty & Employment Agreement is attached hereto
as Exhibit K. Following the Merger, Eckler and the Surviving
Corporation shall use their best efforts to cause Ralph Eckler to
be released from the liability associated with his guaranty of
the Loans on or before May 30, 1997.
(a) Until such time as Ralph Eckler is no longer
a guarantor of or is no longer contractually bound to guarantee
any of the indebtedness due pursuant to the Loans, Eckler and the
Surviving Corporation shall jointly and severally indemnify and
hold harmless Ralph Eckler, his successors, and assigns against
any losses, claims, damages or liabilities (the "Claims") to
which Ralph Eckler may become subject, insofar as such Claims (or
actions in respect thereof) arise out of or are based upon Ralph
Eckler's guaranties of the Loans.
4. FURTHER ASSURANCES.
From time to time from and after the Closing, the
parties shall execute and deliver, or cause to be executed and
delivered, any and all such further agreements, certificates and
other instruments, and shall take or cause to be taken any and
all such further action, as any of the parties may reasonably
deem necessary or desirable in order to carry out the intent and
purposes of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company, Thomas Conlan and Gerald Parker, jointly
and severally, hereby represent and warrant to the best of their
knowledge to Eckler as follows (and with respect to the
representations and warranties contained in Sections 5.3, 5.6
through 5.25, such representations and warranties respecting the
Company shall be deemed to be representations and warranties as
to the Company and its subsidiaries and each of the companies
described in Schedule 5.5 (collectively, the "Target Companies");
provided, however, that as to the Target Companies, any and all
representations and warranties are based solely on and expressly
limited to those representations, warranties, schedules and
<PAGE>
exhibits attached to or contained in the respective purchase
agreements between the Company and each of the Target Companies):
5.1 Title to the Stock. The stockholders of the
Company have good, valid and marketable title to the Company
Stock issued and outstanding, and all of such Company Stock has
been duly authorized and validly issued and is fully paid and non-
assessable, and is (and on the Closing Date will be) free and
clear of all pledges, liens, claims, charges, options, calls,
encumbrances, restrictions and assessments whatsoever (except any
restrictions which may be created by operation of state or
federal securities laws). All issued and outstanding shares of
capital stock of the Company are owned of record and beneficially
as set forth on Schedule 5.1 annexed hereto.
5.2 Valid and Binding Agreement.
(a) The execution, delivery and performance of
this Agreement and the consummation of the Merger and the other
transactions contemplated hereby by the Company have been duly
and validly authorized by the Board of Directors and the
stockholders of the Company, and the Company has the full legal
right, power and authority to execute and deliver this Agreement,
to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the
extent limited by bankruptcy, insolvency, reorganization and
other laws affecting creditors' rights generally, and except that
the remedy of specific performance or similar equitable relief is
available only at the discretion of the court before which
enforcement is sought.
(b) The execution and delivery by the Company of
this Agreement and the performance by the Company of its
obligations hereunder will not violate any provision of law, any
order of any Court or other agency of government, the Certificate
of Incorporation, Bylaws or other governing document of the
Company, or any judgment, award, decree, indenture, agreement,
permit or other instrument to which the Company is a party, or by
which the Company or its assets or properties are bound or
affected, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under, any
such indenture, agreement, permit or other instrument, or result
in a creation or imposition of any lien, charge, security
interest or encumbrance of any nature whatsoever upon the Company
or its assets.
5.3 Organization, Good Standing and Qualification.
The Company: (a) is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation; (b) has all necessary corporate power and
authority to carry on its business and to own, lease and operate
its properties; and (c) except as and to the extent set forth in
<PAGE>
Schedule 5.3 annexed hereto, is qualified to do business as a
foreign corporation in each foreign jurisdiction where such
qualification is required by law. True and complete copies of
the Certificate of Incorporation and By-Laws of the Company
(including all amendments thereto), and a correct and complete
list of the officers and directors of the Company, are annexed
hereto as part of Schedule 5.3.
5.4 Capital Structure; Stock Ownership.
(a) The authorized capital stock of the Company
is as set forth in its Certificate of Incorporation (as amended)
contained in Schedule 5.3. The record and beneficial owners of
the Company Stock are as set forth in Schedule 5.1 and no other
shares of capital stock of the Company are issued or outstanding.
(b) There are no outstanding subscriptions,
options, rights, warrants, convertible securities or other
agreements or calls, demands or commitments, except as set forth
in Schedule 5.4, obligating the Company to issue, transfer or
purchase any shares of its capital stock, or obligating any
stockholder to transfer any shares of Company Stock owned by such
stockholder. No shares of capital stock of the Company are
reserved for issuance pursuant to stock options, warrants,
agreements or other rights to purchase capital stock, except as
set forth in Schedule 5.4.
5.5 Subsidiaries and Investments. The Company does
not own, directly or indirectly, any stock or other equity
securities of any corporation or entity, or has any direct or
indirect equity or ownership interest in any person, firm,
partnership, corporation, venture or business other than the
business conducted by the Company, except as contained in
Schedule 5.5.
5.6 Financial Information. Schedule 5.6 annexed
hereto contains: (i) certain financial information pertaining to
the Company and, each of the Target Companies and the Company
subsidiaries; (ii) a list of the outstanding principal balance of
and approximate accrued interest on all indebtedness including
without limitation accounts payable and loans and/or notes
payable of the Company as of November 30, 1996; (iii) a list of
all obligations of the Company to any of the stockholders of the
Company and/or any of their respective Affiliates on the date
hereof; (iv) a list of all obligations of the Company guaranteed
by any of the stockholders of the Company on the date hereof, and
the terms of such guaranties; and (v) a list reflecting the
nature and amount of all obligations owed to the Company on the
date hereof by any of the stockholders of the Company and/or any
of their respective Affiliates. The information and material set
forth in Schedule 5.6 is true, correct and complete and when
taken as an entirety fairly presents, in all material respects
the financial condition and results of operation therein set
forth.
<PAGE>
5.7 No Material Changes. Except as and to the extent
depicted in Schedule 5.7 annexed hereto (which Schedule may make
reference to any other Schedule hereto), since November 30, 1996,
the business of the Company has continued to be operated only in
the ordinary course, and there has not been:
(a) Any material change in the financial
condition, operations or business of the Company from that
depicted in Schedule 5.6, or any material transaction or
commitment effected or entered into outside of the normal course
of the Company's business nor inconsistent with the Company's
past practice ;
(b) Any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting
the business, operations, assets, properties, financial condition
or prospects of the Company;
(c) Any declaration, setting aside or payment of
any dividend or other distribution with respect to the Company
Stock, any other payment of any kind by the Company to any of the
stockholders of the Company or any of their respective Affiliates
outside of the ordinary course of business nor inconsistent with
the Company's past practice, any forgiveness of any debt or
obligation owed to the Company by any of the stockholders of the
Company or any of their respective Affiliates, or any direct or
indirect redemption, purchase or other acquisition by the Company
of any capital stock of the Company; or
(d) Any other event or condition arising from or
out of the operation of the Company which has or may materially
and adversely affect the business, financial condition, results
of operations or prospects of the Company.
5.8 Tax Matters.
(a) Tax Returns and Audits.
(i) Except as and to the extent disclosed in
Schedule 5.8 annexed hereto: (i)on the date hereof and on the
Closing Date, all federal, state and local tax returns and tax
reports required to be filed by the Company on or before the date
of this Agreement or the Closing Date, as the case may be, have
been and will have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns
and reports are required to be filed; (ii) all federal, state and
local income, franchise, sales, use, property, excise and other
taxes (including interest and penalties and including estimated
tax installments where required to be filed and paid) due from or
with respect to the Company as of the date hereof and as of the
Closing Date have been and will have been fully paid, and
appropriate accruals shall have been made on the Company's books
for taxes not yet due and payable; (iii) as of the Closing Date,
<PAGE>
all taxes and other assessments and levies which the Company is
required by law to withhold or to collect on or before the
Closing Date will have been duly withheld and collected, and will
have been paid over to the proper governmental authorities to the
extent due and payable on or before the Closing Date; and (iv)
there are no outstanding or pending claims, deficiencies or
assessments for taxes, interest or penalties with respect to any
taxable period of the Company. At and after the Closing Date,
the Company will not have any liability for any federal, state or
local income tax with respect to any taxable period ending on or
before the Closing Date, except as and to the extent disclosed in
Schedule 5.8. Discretionary decisions made by Eckler and its
management with respect to filing or amending any tax returns of
the Company concerning periods ended on or prior to the Closing
Date, which decisions are not required under applicable law and
which decisions result in additional liability to the Company
other than as disclosed in this Agreement or the Schedules
annexed hereto, shall not result in any breach of representations
and warranties contained in this Section 5.8(a).
(ii) There are no audits deficiencies,
claims, actions, suits, proceedings or investigations pending
with respect to any federal, state or local tax returns of the
Company, and no waivers of statutes of limitations have been
given or requested with respect to any tax years or tax filings
of the Company.
(iii) The Company has not executed or
entered into (and, prior to the Closing, will not execute or
enter into) with the Internal Revenue Service or any other taxing
authority (A) any agreement or other document extending or having
the effect of extending the period for assessments or collection
of any taxes for which the Company would be liable or (B) a
closing agreement pursuant to Section 7121 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any predecessor
provision thereof or any similar provision of foreign, state or
local tax law that relates to the assets or operations of the
Company.
(iv) The Company is not a party to any
agreement, contract or arrangement that would result, by reason
of the consummation of any of the transactions contemplated
herein, separately or in the aggregate, in the payment of any
"excess parachute payment" within the meaning of Section 280G of
the Code.
(b) Subchapter S Status. Neither the Company nor
any of its stockholders, with respect to the Company, have
applied for qualification as an "S Corporation" as such term is
defined in the Code and regulations promulgated thereunder.
5.9 Personal Property; Liens. The Company has and
owns good and marketable title to all of its personal property,
free and clear of all liens, pledges, claims, security interests
and encumbrances whatsoever, except for the following (all of
which are sometimes referred to as "Permitted Liens"): (a) liens
securing the Company's indebtedness for money borrowed as
reflected in Schedule 5.6, or pursuant to the security agreements
listed in Schedule 5.9 annexed hereto; (b) liens securing the
deferred purchase price of machinery, equipment, vehicles and/or
other fixed assets, as indicated on Schedule 5.9; (c) liens for
current taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings, each of which
<PAGE>
is listed in Schedule 5.9; and (d) liens, pledges, claims,
security interests, encumbrances, mortgages, conditions or
restrictions which are not, individually or in the aggregate,
material in character or amount and do not interfere with the use
made or presently proposed to be made of any such property. All
leases of personal property of the Company are valid and binding
in accordance with their respective terms and there is not under
any of such leases any existing default, or any condition, event
or act which with notice or lapse of time or both would
constitute such a default, nor would consummation of the
transactions contemplated hereby result in a default or any such
condition, event or act.
5.10 Real Property.
(a) The Company does not own or have any interest
of any kind (whether ownership, lease or otherwise) in any real
property except to the extent of the Company's leasehold interest
under the lease for its business premises, and true and complete
copies of all real property leases (including all amendments
thereto) to which the Company is a party in any capacity are
annexed hereto as Schedule 5.10 (the "Leases").
(b) The Company (and, to the best of the
Company's knowledge, the landlord thereunder) is presently in
compliance with all of its obligations under the Leases, and the
premises leased thereunder are in good condition (reasonable wear
and tear excepted), are adequate for the operation of the
Company's business as presently conducted, and a default,
termination, or modification of currently effective payment or
other terms thereunder will not be effected as a result of
consummation of the Merger and the transactions contemplated by
this Agreement. The Company has not received any notice of any
violation of any applicable zoning or building regulation,
ordinance or other law, order, regulation or requirement with
respect to the property subject to the Leases. All buildings
used in the operations of the Company substantially conform with
all applicable ordinances, codes, regulations and requirements,
and no law presently in effect or condition precludes or
restricts continuation of the present use of such properties.
5.11 Accounts Receivable. All accounts receivable
shown in Schedule 5.6, and all accounts receivable thereafter
created or acquired by the Company prior to the Closing Date (the
"Accounts"), have arisen or will arise in the ordinary course of
the Company's business. To the best knowledge of the Company,
there is not any dispute as to the validity or collectibility of
such accounts receivable, except to the extent adequately
<PAGE>
reserved for and set forth in Schedule 5.6 hereto and none of
such accounts receivables have been assigned or pledged, except
to the extent set forth in Schedule 5.11, to any other person,
firm or corporation or is subject to any right of set-off in
respect of any obligations of the Company.
5.12 Inventories. All inventories shown on the
financial statements set forth in Schedule 5.6, and all
inventories thereafter created or acquired by the Company prior
to the Closing Date, consist of items which are of a quality and
quantity which are useable in the ordinary course of the
Company's business.
5.13 Insurance Policies. Schedule 5.13 annexed hereto
contains a true and correct schedule of all insurance coverage
held by the Company concerning its business and properties; and
except as set forth on Schedule 5.13 such coverage insures all of
the Company's assets for the full replacement cost thereof (net
of reasonable deductibles), and are adequate for the normal
operation of the Company's businesses. All premiums with respect
to such policies covering all periods up to and including the
date of this Agreement have been paid, and will be paid on and as
of the Closing Date, and no notice of cancellation or termination
has been received with respect to any such policy. All such
policies are in full force and effect.
5.14 Permits and Licenses. Except as set forth in
Schedule 5.14 annexed hereto, the Company possesses all required
permits, licenses and/or franchises, from whatever governmental
authorities or agencies (domestic and/or foreign) requiring the
same and having jurisdiction over the Company, necessary in order
to operate its business in the manner presently conducted, all of
which permits, licenses and/or franchises are valid, current and
in full force and effect; No proceeding is pending or, to the
knowledge of the Company, threatened to revoke or limit any of
such permits, licenses or franchises; and none of such permits,
licenses or franchises will be voided, revoked or terminated, or
voidable, revocable or terminable, upon and by reason of the
Merger and consummation of the transaction contemplated by this
Agreement.
<PAGE>
5.15 Contracts and Commitments.
(a) Schedule 5.15 annexed hereto lists all
material contracts, leases, commitments, indentures and other
agreements to which any Company is a party (collectively,
"Material Contracts"), except that Schedule 5.15 need not list
any such agreement that is listed on any other Schedule hereto,
or was entered into in the ordinary course of the business of the
Company and that, in any case: (i) is for the purchase of
supplies or other inventory items in the ordinary course of
business; (ii) is related to the purchase or lease of any capital
asset involving aggregate payments of less than $25,000.00 per
annum; or (iii) may be terminated without penalty, premium or
liability by the subject Company on not more than thirty (30)
days' prior written notice.
(b) To the best of the Company's knowledge,
except as set forth in Schedule 5.15: (i) all Material Contracts
are in full force and effect; (ii) the Company has not received
any written notice that any Material Contract is in material
breach or default or is now subject to any condition or event
which has occurred and which, after notice or lapse of time or
both, would constitute a material default by any party under any
such Material Contract; and (iii) none of the Material Contracts
will be voided, revoked or terminated, or voidable, revocable or
terminable, upon and by reason of the Merger and the consummation
of the transactions contemplated by this Agreement.
(c) To the best of the Company's knowledge, no
purchase commitment by the Company is in excess of the normal,
ordinary and usual requirements of the business of the Company.
(d) Except for the Leases and otherwise as set
forth in Schedule 5.15, the Company does not have any outstanding
contracts or commitments that are not cancelable by the Company
without penalty, premium or liability (for severance or
otherwise) on less than thirty (30) days' prior written notice.
(e) There is no outstanding power of attorney
granted by the Company to any person, firm or corporation for any
purpose whatsoever.
5.16 Customers and Suppliers. The Company has not
received any written notice of any existing, announced or
anticipated changes in the policies of any material suppliers or
referral sources which will materially, adversely affect the
business presently being conducted by the Company. The Company
has not lost or been notified that it will lose, and no customer
has notified the Company that it would, in the event of the
consummation of the transactions contemplated by this Agreement,
lose, any customer (or any group of related customers) that
accounted for more than $25,000 of the aggregate revenues of the
<PAGE>
Company for its last full fiscal year or the interim period from
the date of its last full fiscal year through November 30, 1996.
5.17 Labor, Benefit and Employment Agreement.
(a) Except as set forth in Schedule 5.17 annexed
hereto, the Company is not a party to (i) any collective
bargaining agreement or other labor agreement, or (ii) any
agreement with respect to the employment or compensation of any
non-hourly and/or non-union employee(s) which is not terminable
without penalty by the Company on not more than thirty (30) days'
prior written notice.
(b) No union is now certified or, to the best of
the Company's knowledge, claims to be certified as a collective
bargaining agent to represent any employees of the Company, and
there are no labor disputes existing or, to the best of the
Company's knowledge, threatened, involving strikes, slowdowns,
work stoppages, job actions or lockouts of any employees of the
Company. No labor organization or group of employees of the
Company has made a pending demand for recognition, and there are
no representation proceedings or petitions seeking a
representation proceeding presently pending or, to the knowledge
of the Company, threatened to be brought or filed with the
National Labor Relations Board or any other labor relations
tribunal.
(c) There are no unfair labor practice charges or
petitions for election pending or being litigated before the
National Labor Relations Board or any other federal or state
labor commission relating to any employees of any Company. The
Company has not received any written notice of any actual or
alleged violation of any law, regulation, order or contract term
affecting the collective bargaining rights of employees, equal
opportunity in employment, or employee health, safety, welfare,
or wages and hours, nor is the Company aware that any such
violation is threatened to be brought or filed.
(d) With respect to any "multi-employer plan" (as
defined in Section 3(37) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) to which the Company
has at any time been required to make contributions, the Company
has not, at any time on or after April 29, 1980, suffered or
caused any "complete withdrawal" or "partial withdrawal" (as such
terms are respectively defined in Sections 4203 and 4205 of
ERISA) therefrom on its part.
(e) Except as disclosed in Schedule 5.17, the
Company does not maintain, or have any liabilities or obligations
of any kind with respect to, any bonus, deferred compensation,
pension, profit sharing, retirement or other such benefit plan,
and does not have any potential or contingent liability in
respect of any actions or transactions relating to any such plan
other than to make contributions thereto if, as and when due in
respect of periods subsequent to the date hereof. Without
<PAGE>
limitation of the foregoing, (i) the Company has made all
required contributions to or in respect of any and all such
benefit plans, (ii) no "accumulated funding deficiency" (as
defined in Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code")) has been incurred in respect of any of such
benefit plans, and the present value of all vested accrued
benefits thereunder does not, on the date hereof, exceed the
assets of any such plan allocable to the vested accrued benefits
thereunder, (iii) there has been no "prohibited transaction" (as
defined in Section 4975 of the Code) with respect to any such
plan, and no transaction which could give rise to any tax or
penalty under Section 4975 of the Code or Section 502 of ERISA,
and (iv) there has been no "reportable event" (within the meaning
of Section 4043(b) of ERISA) with respect to any such plan. All
of such plans which constitute, are intended to constitute, or
have been treated by the Company as "employee pension benefit
plans" or other plans within Section 3 of ERISA have been
determined by the Internal Revenue Service to be "qualified"
under Section 401(a) of the Code, and have been administered and
are in compliance with ERISA and the Code; and, except such as
might arise by reason of the occurrence of the Merger, the
Company has no knowledge of any state of facts, conditions or
occurrences such as would impair the "qualified" status of any of
such plans.
(f) Except for the group insurance programs and
any other insurance listed in Schedule 5.17, the Company does not
maintain any medical, health, life or other employee benefit
insurance programs or any welfare plans (within the meaning of
Section 3(1) of ERISA) for the benefit of any current or former
employees, and, except as required by statute or governmental
regulation, the Company does not have any liability, fixed or
contingent, for health or medical benefits to any former
employee.
5.18 No Breach of Statute, Decree or Other Instrument.
Except as set forth in Schedule 5.18 annexed hereto: (i) neither
the execution and delivery of this Agreement by the Company, nor
the performance of or compliance with the terms and provisions of
this Agreement on the part of the Company, will violate or
conflict with any term of the Certificate of Incorporation or
By-Laws of the Company or any statute, law, rule or regulation of
any governmental authority affecting the existing business of the
Company, or will at the Closing Date conflict with, result in a
breach of, or constitute a default under, any of the terms,
conditions or provisions of any judgment, order, award,
injunction, decree, contract, lease, agreement, indenture or
other instrument to which the Company is a party or by which the
Company is bound; (ii) no consent, authorization or approval of
or filing with any governmental authority or agency, or any third
party, will be required on the part of the Company in connection
with the consummation of the transactions contemplated hereby;
and (iii) the Company will not be required, whether by law,
<PAGE>
regulation or administrative practice, to reapply for or refile
to obtain any of the licenses, permits or other authorizations
presently held by the Company and required for the operation of
its business as conducted on the date hereof.
5.19 Compliance with Laws.
(a) The Company is, and has been at all times
subsequent to its incorporation, in compliance with all domestic,
foreign, federal, state, local and municipal laws and ordinances
and governmental rules and regulations, and all requirements of
insurance carriers, applicable to its business, affairs,
properties or assets.
(b) Neither the Company, nor to the best of the
Company's knowledge, any of the Company's directors, officers or
employees, has received any written notice of default or
violation, nor is the Company, or to the best of the Company's
knowledge, any of the Company's directors, officers or employees,
in default or violation, with respect to any judgment, order,
writ, injunction, decree, demand or assessment issued by any
court or any federal, state, local, municipal or other
governmental agency, board, commission, bureau, instrumentality
or department, domestic or foreign, relating to any aspect of the
Company's business, affairs, properties or assets. Neither the
Company, nor to the best of the Company's knowledge, any of the
Company's directors, officers or employees, has received written
notice of, been charged with, or is under investigation with
respect to, any violation of any provision of any federal, state,
local, municipal or other law or administrative rule or
regulation, domestic or foreign, relating to any aspect of the
Company's business, affairs, properties or assets, which
violation would have a material adverse effect on the business,
financial condition, results of operations or prospects of the
Company.
(c) Schedule 5.19 sets forth the date(s) of the
last known audits or inspections (if any) of the Company
conducted by or on behalf of the Environmental Protection Agency,
the Occupational Safety and Health Administration, and any other
governmental and/or quasi-governmental agency (federal, state
and/or local).
5.20 Litigation. Except as disclosed in Schedule 5.20
annexed hereto, there is no suit, action, arbitration, or legal,
administrative or other proceeding, or governmental investigation
pending, or to the best knowledge of the Company, threatened, by
or against the Company or any of its assets or properties. The
Company is not aware of any state of facts, events, conditions or
occurrences which might properly constitute grounds for or the
basis of any suit, action, arbitration, proceeding or
investigation against or with respect to the Company.
<PAGE>
5.21 Patents, Licenses and Trademarks. Schedule 5.21
annexed hereto correctly sets forth a list and brief description
of the nature and ownership of: (a) all patents, patent
applications, copyright registrations and applications,
registered trade names, and trademark registrations and
applications, both domestic and foreign, which are presently
owned, filed or held by the Company or any of the Company's
directors, officers, stockholders or employees and which in any
way relate to or are used in the business of the Company; (b) all
licenses, both domestic and foreign, which are owned or
controlled by the Company and/or any of the Company's directors,
officers, stockholders or employees and which in any way relate
to or are used in the business of the Company; and (c) all
franchises, licenses and/or similar arrangements granted to the
Company by others and/or to others by the Company. None of the
patents, patent applications, copyright registrations or
applications, registered trade names, trademark registrations or
applications, franchises, licenses or other arrangements set
forth or required to be set forth in Schedule 5.21 is subject to
any pending challenge known to the Company.
5.22 Transactions with Affiliates. Except as set forth
on Schedule 5.22, no material asset employed in the business of
the Company is owned by, leased from or leased to any of the
stockholders of the Company, any of their respective Affiliates,
members of their families or any partnership, corporation or
trust for their benefit, or any other officer, director or
employee of the Company or any Affiliate of the Company. Except
as set forth on Schedule 5.22, no director, officer or
shareholder of the Company, or any of their respective
Affiliates, owns, directly or indirectly, or has an ownership
interest in (i) any business (corporate or otherwise) which is a
party to any business arrangements or relationships of any kind
with the Company, or (ii) any business (corporate or otherwise)
which conducts the same business as, or business similar to, the
business conducted by the Company.
5.23 Bank Accounts. Annexed hereto as Schedule 5.23
is a correct and complete list of all bank accounts and safe
deposit boxes maintained by or on behalf of the Company, with
indication of all persons having signatory, access or other
authority with respect thereto.
5.24 Schedules Incorporated by Reference. The making
of any recitation in any Schedule hereto shall be deemed to
constitute a representation and warranty that such recitation is
an accurate statement and disclosure of the information required
by the corresponding Section(s) of this Agreement, as, to the
extent, and subject to the qualifications and limitations, set
forth in such corresponding Section(s).
5.25 No Consents. No consents to the transaction
contemplated in this Agreement are required other than as set
forth in Schedule 5.25, which, in the absence of such consents,
<PAGE>
will result in a default under any leases or contracts (including
without limitation loan agreements or other debt instruments) to
which the Company is a party, or will result in an acceleration
of any obligations of the Company.
5.26 Condition of Assets. All tangible personal
property, fixtures, machinery and equipment comprising the assets
of the Company are (i) in a reasonable state of repair (ordinary
wear and tear excepted) and operating condition and are suitable
for the purposes for which they are being used and (ii)
substantially conform with all applicable ordinances, codes,
regulations and requirements, including without limitation, all
applicable ordinances, codes, regulations and requirements
relating to the environment or occupational safety, and no law
presently in effect or condition precludes or materially
restricts continuation of the present use of such properties.
5.27 Other Information. None of the information
furnished by the Company in this Agreement, the Exhibits hereto,
the Schedules identified herein, or in any certificate or other
document to be executed or delivered pursuant hereto by the
Company at or prior to the Closing Date, is, or on the Closing
Date will be, false or misleading or contains, or on the Closing
Date will contain, any misstatement of material fact, or omits,
or on the Closing Date will omit, to state any material fact
required to be stated in order to make the statements therein not
misleading in light of the circumstances under which they were
made.
6. REPRESENTATIONS AND WARRANTIES OF ECKLER AND MERGER
SUBSIDIARY.
Eckler and Merger Subsidiary hereby represent and
warrant to the Company and each of its stockholders, as intended
third party beneficiaries hereunder, as follows:
6.1 Organization, Good Standing and Qualification.
(a) Eckler is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Florida, with all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby. Eckler's
capital structure, including all issued and outstanding shares of
Eckler Stock, any options, warrants, subscriptions, rights,
convertible securities or other agreements or call, demands or
commitments is as set forth in Schedule 6.1. There are no other
securities or rights to acquire securities of Eckler except as
set forth on Schedule 6.1.
(b) The Merger Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws
of the state of Delaware, with all necessary power and authority
to consummate the Merger with the Company as contemplated hereby.
<PAGE>
The Merger Subsidiary is a wholly-owned subsidiary of Eckler, and
will have no material assets or liabilities at the time of the
Closing.
6.2 Authorization of Agreement. The execution,
delivery and performance of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby by
Eckler have been duly and validly authorized by the Board of
Directors of Eckler; and Eckler has (and, at the time of the
Closing, the Merger Subsidiary will have) the full legal right,
power and authority to execute and deliver this Agreement, to
perform their respective obligations hereunder, and to consummate
the transactions contemplated hereby. No further corporate
authorization is necessary on the part of Eckler or Merger
Subsidiary to consummate the transactions contemplated hereby.
6.3 Valid and Binding Agreement. This Agreement, when
executed and delivered by Eckler, constitutes and will constitute
the legal, valid and binding obligations of Eckler, enforceable
against Eckler in accordance with its respective terms, except to
the extent limited by bankruptcy, insolvency, reorganization and
other laws affecting creditors' rights generally, and except that
the remedy of specific performance or similar equitable relief is
available only at the discretion of the court before which
enforcement is sought.
6.4 No Breach of Statute or Contract. Neither the
execution and delivery of this Agreement by Eckler and Merger
Subsidiary, nor compliance with the terms and provisions of this
Agreement on the part of Eckler or Merger Subsidiary, will:
(a) violate any statute or regulation of any governmental
authority, domestic or foreign, affecting Eckler or Merger
Subsidiary; (b) require the issuance of any authorization,
license, consent or approval of any federal or state governmental
agency; or (c) conflict with or result in a breach of any of the
terms, conditions or provisions of any judgment, order,
injunction, decree, note, indenture, loan agreement or other
agreement or instrument to which Eckler or Merger Subsidiary is a
party, or by which Eckler or Merger Subsidiary is bound, or
constitute a default thereunder.
6.5 Business and Financial Information. The financial
statements and other information contained in the most recent
prospectus, annual report, quarterly report and current report on
Form 8-K of Eckler as filed with the Securities and Exchange
Commission (the "SEC") are correct and complete in all material
respects, as of their respective dates and as amended through the
date hereof and the financial statements included therein present
fairly the consolidated financial position of Eckler, as of their
respective dates and as amended through the date hereof, in
conformity with generally accepted accounting principles
consistently applied (subject, in the case of unaudited
statements, to the absence of footnote disclosures and to
customary fiscal year-end audit adjustments which will not,
<PAGE>
individually or in the aggregate, be material to the consolidated
financial condition of Eckler and its subsidiaries). Since the
date of the last of such reports, there has been no material
adverse change in the financial condition or operations of Eckler
from that reflected in the financial statements included in such
reports, except as set forth on Schedule 6.5 hereto.
6.6 Eckler Shares. When transferred or issued to the
stockholders of the Company or the holders of the Potential
Securities pursuant to Section 2 above, all the Eckler Shares
delivered to the stockholders shall be duly authorized, validly
issued and fully paid and non-assessable, and free and clear of
all pledges, liens, claims, charges, options, calls,
encumbrances, restrictions and assessments whatsoever (except any
restrictions which may be created by operation of state or
federal securities laws).
6.7 Investment. Eckler will be acquiring ownership of
the outstanding capital stock of the Surviving Corporation for
its own account, for investment purposes only, and not with a
view to the resale or distribution thereof.
6.8 Tax Matters.
(a) Tax Returns and Audits.
(i) Except as and to the extent disclosed in
Schedule 6.8 annexed hereto: (i)on the date hereof and on the
Closing Date, all federal, state and local tax returns and tax
reports required to be filed by Eckler on or before the date of
this Agreement or the Closing Date, as the case may be, have been
and will have been timely filed with the appropriate governmental
agencies in all jurisdictions in which such returns and reports
are required to be filed; (ii) all federal, state and local
income, franchise, sales, use, property, excise and other taxes
(including interest and penalties and including estimated tax
installments where required to be filed and paid) due from or
with respect to the Eckler as of the date hereof and as of the
Closing Date have been and will have been fully paid, and
appropriate accruals shall have been made on the Eckler's books
for taxes not yet due and payable; (iii) as of the Closing Date,
all taxes and other assessments and levies which the Eckler is
required by law to withhold or to collect on or before the
Closing Date will have been duly withheld and collected, and will
have been paid over to the proper governmental authorities to the
extent due and payable on or before the Closing Date; and (iv)
there are no outstanding or pending claims, deficiencies or
assessments for taxes, interest or penalties with respect to any
taxable period of Eckler. At and after the Closing Date, Eckler
will not have any liability for any federal, state or local
income tax with respect to any taxable period ending on or before
the Closing Date, except as and to the extent disclosed in
Schedule 6.8.
<PAGE>
(ii) There are no audits deficiencies,
claims, actions, suits, proceedings or investigations pending
with respect to any federal, state or local tax returns of
Eckler, and no waivers of statutes of limitations have been given
or requested with respect to any tax years or tax filings of
Eckler.
(iii)Eckler has not executed or entered into
(and, prior to the Closing, will not execute or enter into) with
the Internal Revenue Service or any other taxing authority (A)
any agreement or other document extending or having the effect of
extending the period for assessments or collection of any taxes
for which Eckler would be liable or (B) a closing agreement
pursuant to Section 7121 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any predecessor provision thereof or any
similar provision of foreign, state or local tax law that relates
to the assets or operations of Eckler.
(iv) Eckler is not a party to any agreement,
contract or arrangement that would result, by reason of the
consummation of any of the transactions contemplated herein,
separately or in the aggregate, in the payment of any "excess
parachute payment" within the meaning of Section 280G of the
Code.
(b) Subchapter S Status. Neither Eckler nor any
of its shareholders, with respect to Eckler, have applied for
the Code and regulations promulgated thereunder.
6.9 Other Information. None of the information
furnished by Eckler in this Agreement, the Exhibits hereto, the
Schedules identified herein, or in any certificate or other
document to be executed or delivered pursuant hereto by Eckler at
or prior to the Closing Date, is, or on the Closing Date will be,
false or misleading or contains, or on the Closing Date will
contain, any misstatement of material fact, or omits, or on the
Closing Date will omit, to state any material fact required to be
stated in order to make the statements therein not misleading in
light of the circumstances under which they were made.
7. THE COMPANY'S OBLIGATIONS BEFORE THE CLOSING DATE.
The Company covenants and agrees that, from the date
hereof until the Closing Date:
7.1 Access to Information. The Company shall permit
Eckler and its counsel, accountants and other representatives, to
have reasonable access during normal business hours to all
properties, books, accounts, records, contracts, documents and
information relating to the Company, and, to the extent the
Company is legally able, to each of the Target Companies. Eckler
and its representatives shall also be permitted to freely consult
with the Company's counsel concerning the business of the
Company.
<PAGE>
7.2 Conduct of Business in Normal Course. The Company
shall carry on its business activities in substantially the same
manner as heretofore conducted, and shall not make or institute
any unusual or novel methods of service, sale, purchase, lease,
management, accounting or operation that will vary materially
from those methods used by the Company as of the date hereof,
without in each instance obtaining the prior written consent of
Eckler.
7.3 Preservation of Business and Relationships. The
Company shall: (i) without making or incurring any unusual
commitments or expenditures, use its best efforts to preserve its
business organization intact and to preserve its present
relationships with referral sources, clients, customers,
suppliers and others having business relationships with it.
7.4 Maintenance of Insurance; Assets and Records. The
Company shall: (i) continue to carry its existing insurance, to
the extent obtainable upon reasonable terms, (ii) maintain all
its assets and properties in good repair, order and condition,
reasonable wear and tear excepted, and (iii) maintain its books
of account and records in the usual, regular and ordinary manner,
on a basis consistent with past practice, and use its best
efforts to comply with all laws applicable to it and perform all
its material obligations without default.
7.5 Corporate Matters. The Company shall not, without
the prior written consent of Eckler:
(a) amend its Certificate of Incorporation or By--
Laws;
(b) issue any shares of its capital stock;
(c) except as otherwise set forth in Schedule
7.5(c) issue or create any warrants, obligations, subscriptions,
options, convertible securities or other commitments under which
any additional shares of its capital stock might be directly or
indirectly issued;
(d) amend, cancel or modify any Material Contract
or enter into any material new agreement, commitment or
transaction except, in each instance, in the ordinary course of
business;
(e) except as otherwise set forth in Schedule
7.5(e) pay, grant or authorize any salary increases or bonuses
except in the ordinary course of business and consistent with
past practice, or enter into any employment, consulting or
management agreements;
(f) modify in any material respect any material
agreement to which it is a party or by which it may be bound,
except in the ordinary course of business;
<PAGE>
(g) make any material change in its management
personnel;
(h) except pursuant to commitments in effect on
the date hereof (to the extent disclosed in this Agreement or in
any Schedule hereto), make any capital expenditure(s) or
commitment(s), whether by means of purchase, lease or otherwise,
or any operating lease commitment(s), in excess of $25,000.00 in
the aggregate;
(i) sell, assign or dispose of any capital
asset(s) with a net book value in excess of $25,000.00 as to any
one item;
(j) materially change its method of collection of
accounts or notes receivable, accelerate or slow its payment of
accounts payable, or prepay any of its obligations or
liabilities, other than prepayments to take advantage of trade
discounts not otherwise inconsistent with or in excess of
historical prepayment practices;
(k) declare, pay, set aside or make any
dividend(s) or other distribution(s) of cash or other property,
redeem any outstanding shares of its capital stock, or pur
purchase any outstanding shares of capital stock
of or equity interest in any other corporation or entity;
(l) incur any liability or indebtedness except,
in each instance, in the ordinary course of business;
(m) subject any of its assets or properties to
any further liens or encumbrances, other than Permitted Liens;
(n) forgive any liability or indebtedness owed to
it by any of the stockholders of the Company or any of their
respective Affiliates; or
(o) agree to do, or take any action in further
ance of, any of the foregoing.
7.6 Other Transactions. The Company shall not enter
into any transaction or make any agreement or commitment, or
permit any event to occur, which would result in any of the
representations, warranties or covenants of the Company contained
in this Agreement not being true and correct at and as of the
time immediately after the occurrence of such transaction or
event.
<PAGE>
8. ADDITIONAL AGREEMENTS OF THE PARTIES.
8.1 Confidentiality. Notwithstanding anything to the
contrary contained in this Agreement, and subject only to any
disclosure requirements which may be imposed upon Eckler under
applicable state or federal securities or antitrust laws, it is
expressly understood and agreed by Eckler, the Company, Ralph
Eckler, Thomas Conlan and Gerald Parker that (a) this Agreement,
the Schedules and Exhibits hereto, and the conversations,
negotiations and transactions relating hereto and/or contemplated
hereby, and (b) all financial information, business records and
other non-public information concerning the Company or Eckler
which any of the parties or their respective representatives has
received or may hereafter receive, shall be maintained in the
strictest confidence by the parties and their respective
representatives, and shall not be disclosed to any person that is
not associated or affiliated with any of the parties and involved
in the transactions contemplated hereby, without the prior
written approval of the Company or Eckler, as applicable. The
parties hereto shall use their best efforts to avoid disclosure
of any of the foregoing or undue disruption of any of the
business operations or personnel of the Company or Eckler. In
the event that the transactions contemplated hereby shall not be
consummated for any reason, each of the parties covenants and
agrees that neither it nor its representatives shall retain any
documents, lists or other writings which they may have received
or obtained in connection herewith or any documents incorporating
any of the information contained in any of the same (all of
which, and all copies thereof in the possession or control of
themselves or their representatives, shall be returned to the
original source of the material at issue). The parties hereto
shall be responsible for any damages sustained by reason of their
respective breaches of this Section 8.1, and this Section 8.1 may
be enforced by injunctive relief.
8.2 Due Diligence Investigation. At all times prior to
the Closing Date, Eckler and its representatives shall be
permitted to conduct during normal business hours a full and
complete due diligence investigation of the assets, business,
properties, financial condition and prospects of the Company,
and, to the extent legally permitted, of the Target Companies,
the results of which due diligence investigation shall be
satisfactory to Eckler. The Company shall, and shall cause the
principal executive officers, legal and financial
representatives, agents and employees of the Company, and, to the
extent legally permitted, of the Target Companies to, fully
cooperate to enable Eckler and its representatives to conduct a
full due diligence investigation of the Company, including
interviews with personnel and/or contacts with suppliers or
customers.
8.3 Additional Agreements and Instruments. On or
before the Closing Date, the Company, Eckler and the Merger
<PAGE>
Subsidiary (as appropriate) shall execute, deliver and file the
Certificate of Merger and all exhibits, agreements, certificates,
instruments and other documents, not inconsistent with the
provisions of this Agreement, which, in the opinion of counsel to
Eckler, shall reasonably be required to be executed, delivered
and filed in order to consummate the Merger and the other
transactions contemplated by this Agreement.
8.4 Non-Interference. None of the parties shall cause
to occur any act, event or condition which would cause any of
their respective representations and warranties made in this
Agreement to be or become untrue or incorrect in any material
respect as of the Closing Date, or would interfere with,
frustrate or render unreasonably expensive the satisfaction by
the other party or parties of any of the conditions precedent set
forth in Sections 9,10 and 11 below.
8.5 Management of the Surviving Corporation and Eckler
following the Closing Date.
(a) At the Closing, the Company shall deliver to
Eckler a written statement from the Company designating three (3)
individuals to serve as directors of Eckler subsequent to the
Closing (the "Designated Directors") and identifying those
individuals who shall serve as officers of Eckler subsequent to
the Closing (the "Designated Officers"). Simultaneously
therewith, Eckler shall deliver to the Company (i) resignations
of the officers and directors of Eckler set forth on Exhibit L,
attached hereto, and (ii) a resolution electing as directors of
Eckler the Designated Directors and appointing as officers of
Eckler the Designated Officers. The parties acknowledge and
agree that the board of directors of Eckler immediately following
the Closing Date shall consist of not more than six (6)
individuals, each with a term that shall expire upon the next
annual meeting of Eckler. Three of such directors shall be the
Designated Directors. Within thirty (30) days following the
Closing, the six (6) Eckler directors shall meet and elect a
seventh (7th) director. In the event a Designated Director
cannot complete their term, then the remaining Designated
Directors may appoint a successor to finish such term. At the
first annual meeting of the shareholders of Eckler following the
Closing, Thomas Conlan and Gerald Parker shall vote their shares
in favor of the election of the three Eckler directors that
served as directors of Eckler immediately prior to the election
of the Designated Directors.
(b) Eckler shall cause those executive officers
of Eckler identified and set forth in the attached Exhibit L to
resign from their positions with Eckler effective upon the
Closing Date. Such resignations and separations shall be on
terms and conditions mutually agreeable to both the Company and
Eckler.
<PAGE>
9. CONDITIONS PRECEDENT TO ECKLER'S PERFORMANCE.
The obligations of Eckler to consummate the
transactions contemplated by this Agreement are further subject
to the satisfaction, at or before the Closing Date, of all the
following conditions, any one or more of which may be waived in
writing by Eckler:
9.1 Accuracy of Representations and Warranties. All
representations and warranties made by the Company, Thomas Conlan
and Gerald Parker in this Agreement, in any Schedule(s) or
Exhibits hereto, and/or in any written statement delivered to
Eckler under this Agreement shall be true and correct in all
material respects, to the best of their knowledge, on and as of
the Closing Date as though such representations and warranties
were made on and as of that date.
9.2 Performance. The Company shall have performed,
satisfied and complied with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied
or complied with by them on or before the Closing Date.
9.3 Certification. Eckler shall have received a
certificate, dated the Closing Date, signed by an officer of the
Company, and Thomas Conlan and Gerald Parker certifying, in such
detail as Eckler and its counsel may reasonably request, that the
conditions specified in Sections 9.1 and 9.2 above have been
fulfilled.
9.4 Resolutions. Eckler shall have received certified
resolutions of the Board of Directors and the stockholders of the
Company, in form reasonably satisfactory to counsel for Eckler,
authorizing the Company's execution, delivery and performance of
this Agreement and the Merger, and all actions to be taken by the
Company hereunder (including resolutions which elect such persons
as officers and directors of the Company).
9.5 Good Standing Certificates. The Company shall
have delivered to Eckler a certificate or telegram issued by the
Secretary of State of the jurisdiction of incorporation of the
Company, evidencing the good standing of the Company in its
jurisdiction of incorporation as of a date not more than ten (10)
calendar days prior to the Closing Date.
9.6 Absence of Litigation. No action, suit or
proceeding by or before any court or any governmental body or
authority, against the Company, the Target Companies, Thomas
Conlan or Gerald Parker or pertaining to the transactions
contemplated by this Agreement or their consummation, shall have
been instituted on or before the Closing Date, which action, suit
or proceeding would, if determined adversely, have a material
adverse effect on the business, financial condition, operations
or prospects of the Company, or impair the ability of any of the
<PAGE>
stockholders of the Company to deliver in the Merger all of their
common stock of the Company free and clear of all pledges, liens,
claims, charges, options, calls, encumbrances, restrictions and
assessments whatsoever.
9.7. Consents. All necessary disclosures to and
agreements and consents of (a) any parties to any Material
Contracts and/or any licensing authorities which are material to
the Company's business, (including all outstanding indebtedness
and leases) and (b) any governmental authorities or agencies to
the extent required in connection with the transactions
contemplated by this Agreement, shall have been obtained, shall
be in such form as shall be satisfactory to Eckler and true and
complete copies thereof shall be delivered to Eckler on or before
the Closing Date.
9.8 Condition of Property. Between the date of this
Agreement and the Closing Date, assets of the Company having an
aggregate fair market value of $25,000.00 or more shall not have
been lost, destroyed or irreparably damaged by fire, flood,
explosion, theft or any other cause, unless covered by insurance.
9.9 No Material Adverse Change. On the Closing Date,
there shall not have occurred any event or condition materially
and adversely affecting the financial condition, results of
operations or business prospects of the Company from those
reflected in the financial statements set forth in Schedule 5.6.
9.10 Satisfactory Due Diligence Investigation.
3.13 Satisfactory Audit and Due DiligenceEckler, in its sole and
absolute discretion, shall be satisfied with the results of its
due diligence investigation. of, without limitation, the Company,
the Target Companies, and the business and financial condition of
the Company and the Target Companies.
9.11 Execution and Delivery of Exhibits. On or before
the Closing Date, the Company shall have executed and delivered
to the Merger Subsidiary the appropriate Certificate of Merger
and the executed Employment Agreement. All Exhibits and Schedules
shall have been completed and delivered to Eckler.
9.12 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with
the transactions contemplated by this Agreement, and all
documents incidental thereto, shall be reasonably satisfactory in
form and substance to Eckler and its counsel. The Company shall
have submitted to Eckler or its representatives for examination
the originals or true and correct copies of all records and
documents relating to the business and affairs of the Company
which Eckler may have requested in connection with said
transactions.
9.13 Consummation of Acquisitions. Eckler shall be
satisfied, in its reasonable discretion, that the Company shall
have the ability to close upon and consummate all of the
<PAGE>
acquisitions identified in Schedule 9.13, attached hereto,
provided, that, the Company may substitute and close one or more
new transactions of substantially equivalent economic value and
content for any acquisition identified on Schedule 9.13. In the
event of such a substitution, Eckler may seek a supplement to the
fairness opinion to be provided by its investment banker pursuant
to Section 9.14 hereinafter, opining that, taking into
consideration such substitution, the transaction from a financial
point-of-view is still fair to its shareholders. The Company
shall reimburse Eckler for any reasonable expenses incurred by
Eckler in securing the services of an investment banker to render
the supplement to the fairness opinion.
9.14 Investment Banking Fairness Opinion. Eckler shall
solicit from its investment bankers and shall have received from
such investment bankers an opinion satisfactory to Eckler as to
the fairness of the transaction from a financial point-of-view to
its shareholders. The Company shall reimburse Eckler for any
reasonable expenses incurred by Eckler in securing the services
of an investment banker to render the fairness opinion.
9.15 Barnett Bank of Central Florida, N.A.'s Consent to
the Merger. Eckler shall solicit and shall have received the
consent of Barnett Bank of Central Florida, N.A. as to the
consummation of the Merger set forth herein.
9.16 Executive Employment Agreements. The Company
shall have entered into employment agreements satisfactory to
Eckler and the Company with the executives identified on Schedule
9.16.
10. CONDITIONS PRECEDENT TO THE COMPANY'S PERFORMANCE.
The obligations of the Company to consummate the Merger
and the transactions contemplated by this Agreement are further
subject to the satisfaction, at or before the Closing Date, of
all of the following conditions, any one or more of which may be
waived in writing by the Company:
10.1 Accuracy of Representations and Warranties. All
representations and warranties made by Eckler in this Agreement
and/or in any written statement delivered by Eckler under this
Agreement shall be true and correct in all material respects on
and as of the Closing Date as though such representations and
warranties were made on and as of that date.
10.2 Performance. Eckler shall have performed,
satisfied and complied with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied
or complied with by Eckler on or before the Closing Date.
10.3 Certification. The Company shall have received a
certificate, dated the Closing Date, signed by an officer of
Eckler certifying, in such detail as the Company and its counsel
<PAGE>
may reasonably request, that the conditions specified in Sections
10.1 and 10.2 above have been fulfilled.
10.4 Resolutions. The Company shall have received
certified resolutions of the Board of Directors of Eckler and the
Merger Subsidiary and certified resolutions of Eckler as
shareholder of Merger Subsidiary, in form reasonably satisfactory
to counsel for the Company, authorizing the Merger and Eckler's
execution, delivery and performance of this Agreement and all
actions to be taken by Eckler and the Merger Subsidiary
hereunder.
10.5 Execution and Delivery of Exhibits. The Merger
Subsidiary shall have executed and delivered to the Company the
Certificate of Merger. All Exhibits and Schedules shall have
been completed and delivered to the Company.
10.6 Proceedings and Instruments Satisfactory. All
proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incidental
thereto, shall be reasonably satisfactory in form and substance
to the Company and its counsel.
10.7 Performance by Ralph Eckler. Ralph Eckler
shall have executed and delivered to the Company an original
Employment Agreement as set forth hereinabove.
10.8 No Material Adverse Change. On the Closing Date,
there shall not have occurred any event or condition materially
and adversely affecting the financial condition, results of
operations or business prospects of Eckler from those reflected
in Eckler's most recent Post Effective Amendment No. 2 to
Eckler's Registration Statement on Form SB-2, quarterly report
and other current reports filed with the SEC.
10.9 Approval of Employment Agreements. The Company
shall have approved, in writing, on or before the Closing Date,
any employment agreements executed by Eckler from the date of
execution of the letter of intent (October 28, 1996).
11. CONDITIONS PRECEDENT TO RALPH ECKLER'S PERFORMANCE.
11.1 Delivery of Agreements. The Company shall have
executed and delivered to Ralph Eckler an original Employment
Agreement and Ralph Eckler Option Agreement.
12. CLOSING.
12.1 Place and Date of Closing. Unless this Agreement
shall be terminated pursuant to Section 13 below, the
consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Greenberg
Traurig, 111 North Orange Avenue, Suite 2050, Orlando, Florida
32801, or such other location as is agreed to between the
<PAGE>
parties, at a time mutually agreeable to the parties, or on such
date as may be reasonably required to accommodate a satisfaction
of the conditions precedent to Closing hereunder (the date of the
Closing being referred to in this Agreement as the "Closing
Date").
12.2 Actions at Closing. On the Closing Date,
simultaneous with the Closing, the parties shall file or cause to
be filed Certificate of Merger with the Secretary of State of the
applicable jurisdiction. At the Closing, the parties shall make
all payments and deliveries stated in this Agreement to be made
at the Closing and/or on or prior to the Closing Date.
13. TERMINATION OF AGREEMENT.
13.1 General. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time
prior to the Closing: (a) by Eckler if it is not satisfied, in
its sole and absolute discretion, with the results of its due
diligence investigation; (b) by the mutual written consent of
Eckler, the Company, Ralph Eckler, Thomas Conlan and Gerald
Parker; (cc) by Eckler, or by the Company, if: (i) a material
breach shall exist with respect to the written representations
and warranties made by the other party or parties, as the case
may be, (ii) the other party or parties, as the case may be,
shall take any action prohibited by this Agreement, if such
actions shall or may have a material adverse effect on the
Company or on Eckler, and/or the transactions contemplated
hereby, (iii) the other party or parties, as the case may be,
shall not have furnished, upon reasonable notice therefor, such
certificates and documents required in connection with the
transactions contemplated hereby and matters incidental thereto
as it or they shall have agreed to furnish, and it is reasonably
unlikely that the other party or parties will be able to furnish
such item(s) prior to the Outside Closing Date specified below,
or (iv) any consent of any third party to the transactions
contemplated hereby (whether or not the necessity of which is
disclosed herein or in any Schedule hereto) is reasonably
necessary to prevent a default under any outstanding material
obligation of any party hereto and such consent is not obtainable
without material cost or penalty (unless the party or parties not
seeking to terminate this Agreement agrees or agree to pay such
cost or penalty); or (d) by Eckler or by the Company, at any time
on or after _________________December 30, 1996 (the "Outside
Closing Date"), if the transactions contemplated hereby shall not
have been consummated prior thereto, and the party directing
termination shall not then be in breach or default of any
obligations imposed upon such party by this Agreement.
13.2 Effect of Termination. In the event of
termination of this Agreement pursuant to this Section 13, prompt
written notice shall be given by the terminating party to the
other party, and no party to this Agreement shall have any
further liability to the other (i) except as provided in Section
<PAGE>
8.1 above or Section 16, below, or (ii) except arising out of a
breach by such party of this Agreement prior to the termination
thereof.
14. INDEMNIFICATION.
14.1 General.
(a) The Company shall defend, indemnify and hold
harmless the Surviving Corporation and Eckler from, against and
in respect of any and all claims, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties, fines and reasonable attorneys'
fees, that the Surviving Corporation and/or Eckler may incur,
sustain or suffer including without limitation any audit costs
incurred by an Internal Revenue Service audit of the Company
and/or any of the Target Companies which results in a tax
deficiency for the tax year(s) audited ("Losses") as a result of
any breach of, or failure by the Company, Thomas Conlan or Gerald
Parker to perform, any of the representations, warranties,
covenants or agreements of the Company, Thomas Conlan or Gerald
Parker contained in this Agreement or in any Schedule(s)
furnished by or on behalf of the Company under this Agreement.
(b) The Surviving Corporation and Eckler shall
jointly and severally defend, indemnify and hold harmless the
stockholders of the Company and the holders of the Potential
Securities (collectively the "Holders") from, against and in
respect of any and all claims, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees,
that such Holders may incur, sustain or suffer as a result of any
breach of, or failure by Eckler to perform, any of the
representations, warranties, covenants or agreements of Eckler
contained in this Agreement.
14.2 Limitations on Certain Indemnity.
(a) As used in this Section 14.2, "Losses" shall
mean and refer to, collectively, Losses as defined in Section
14.1(a) above.
(b) The Surviving Corporation and Eckler shall be
entitled to indemnification by the Company, Thomas Conlan and
Gerald Parker, jointly and severally, for Losses referenced under
Section 14.1(a), and the Company and the Holders shall be
entitled to indemnification by the Surviving Corporation and
Eckler, jointly and severally, for losses referenced under
Section 14.1(b), only in respect of claims for which notice of
claim shall have been given on or before the third anniversary of
the Closing Date, or, with respect to Losses relating to a breach
of any warranties under Section 5.8 above, the expiration of the
final statute of limitations for those tax returns covered by the
warranties under Section 5.8 above; provided, however, that no
<PAGE>
party shall be entitled to indemnification in the event that the
subject claim for indemnification relates to a third-party claim
and the prospective indemnified party (as the case may be)
delayed giving notice thereof to such an extent as to cause
material prejudice to the defense of such third-party claim.
14.3 Claims for Indemnity. Whenever a claim shall
arise for which any party shall be entitled to indemnification
hereunder, the indemnified party shall notify the indemnifying
party in writing within thirty (30) days of the indemnified
party's first receipt of notice of, or the indemnified party's
obtaining actual knowledge of, such claim, and in any event
within such shorter period as may be necessary for the
indemnifying party or parties to take appropriate action to
resist such claim. Such notice shall specify all facts known to
the indemnified party giving rise to such indemnity rights and
shall estimate (to the extent reasonably possible) the amount of
potential liability arising therefrom. If the indemnifying party
shall be duly notified of such dispute, the parties shall attempt
to settle and compromise the same or may agree to submit the same
to American Arbitration Association arbitration in Orlando,
Florida or, if unable or unwilling to do any of the foregoing,
such dispute shall be settled by appropriate litigation, and any
rights of indemnification established by reason of such
settlement, compromise, arbitration or litigation shall promptly
thereafter be satisfied by those indemnifying parties obligated
to make indemnification hereunder in such amount as shall be
necessary to satisfy all applicable Losses determined in
accordance with such settlement and compromise, or by final
nonappealable order or judgment of the applicable judicial or
arbitration panel. Losses which take the form of litigation or
arbitration costs and expenses (including reasonable attorneys'
fees) which are not incurred in connection with an action or
demand by a third party against the indemnified party or any of
its Affiliates, shall not be paid on an ongoing basis as
incurred, but rather all such costs and expenses incurred by the
prevailing party in any such action shall be paid by the other
party thereto.
14.4 Right to Defend. If the facts giving rise to any
claim for indemnification shall involve any actual or threatened
action or demand by any third party against the indemnified party
or any of its Affiliates, the indemnifying party or parties shall
be entitled (without prejudice to the indemnified party's right
to participate at its own expense through counsel of its own
choosing), at their expense and through a single counsel of their
own choosing, to defend or prosecute such claim in the name of
the indemnifying party or parties, or any of them, or if
necessary, in the name of the indemnified party. All Losses
which take the form of claims for litigation costs and expenses
(including reasonable attorneys' fees) shall be paid to the
indemnified party in cash on an ongoing basis as incurred. In any
event, the indemnified party shall give the indemnifying party
advance written notice of any proposed compromise or settlement
of any such claim. If the remedy sought in any such action or
demand is solely money damages, the indemnifying party shall have
thirty (30) days after receipt of such notice of settlement to
<PAGE>
object to the proposed compromise or settlement, and if it does
so object, the indemnifying party shall be required to undertake,
conduct and control, through counsel of its own choosing and at
its sole expense, the settlement or defense thereof, and the
indemnified party shall cooperate with the indemnifying party in
connection therewith.
15. POST-CLOSING EVENTS.
In addition to the post-Closing covenants set forth in
Section 4 above, the parties hereby further agree that, from and
after the Closing:
15.1 Accounting Cooperation. The Company shall cause
the accountants heretofore retained by the Company to cooperate
with Eckler's accountants in connection with ongoing audit work
relating to periods prior to the Closing Date, as required by
applicable federal and state securities laws, and other
reasonable requirements. Such cooperation shall include, without
limitation, providing such assurances, comfort letters and access
to work papers as may reasonably be requested by Eckler and its
accountants.
16. COSTS.
16.1 Finder's or Broker's Fees. Eckler (on the one
hand) and the Company (on the other hand) represents and warrants
that neither they nor any of their respective Affiliates have
dealt with any broker or finder in connection with any of the
transactions contemplated by this Agreement, and no broker or
other person is entitled to any commission or finder's fee in
connection with any of these transactions. The Company shall
reimburse Eckler for any reasonable expenses incurred by Eckler
in securing the services of an investment banker to render a
fairness opinion.
16.2 Expenses. Each party to this Agreement shall be
responsible for its own costs and fees incurred in connection
with the negotiation and preparation of this Agreement and
exhibits referenced herein, and the consummation of the
transactions contemplated hereby. Except as otherwise provided
herein, Eckler, shall pay all closing expenses; provided, that
all professional fees and costs for the negotiation and review of
this Agreement and for preparation of closing schedules and
financial statements, that are incurred by and on behalf of the
Company shall be borne by the Company.
17. PARTIES.
17.1 Parties in Interest. Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or
<PAGE>
remedies under or by reason of this Agreement on any persons
other than the parties to it and their respective heirs,
executors, administrators, personal representatives, successors
and permitted assigns, nor is anything in this Agreement intended
to relieve or discharge the obligations or liability of any third
persons to any party to this Agreement, nor shall any provision
give any third persons any right of subrogation or action over or
against any party to this Agreement.
17.2 Notices. All notices, requests, demands and
other communications under this Agreement shall be in writing and
shall be deemed to have been duly given (i) on the date of
service if served personally on the party to whom notice is to be
given, or on the day after the date sent by recognized overnight
courier service with all charges prepaid, or (ii) three (3) days
after being deposited in the United States mail if sent by first
class mail, registered or certified, postage prepaid, and
properly addressed as follows:
(a) If to Eckler the Merger Subsidiary or
Ralph Eckler:
Eckler Industries, Inc.
5200 South Washington Avenue
Titusville, Florida 32780
Attention: Ron Mohr, Vice President Finance
with a copy to:
Smith, MacKinnon, Greeley,
Bowdoin & Edwards, P.A.
Citrus Center
255 South Orange Avenue, Suite 800
Orlando, Florida 32801
Attention: John P. Greeley, Esq.
(b) If to the Company:
Smart Choice Holdings, Inc.
101 Phillippe Parkway, Suite 300
Safety Harbor, Florida 34695
Attention: Thomas E. Conlan
<PAGE>
with a copy to:
Greenberg Traurig
111 North Orange Avenue, Suite 2050
Orlando, Florida 32801
Attention: Randolph H. Fields, Esq.
or to such other address as either party shall have specified by
notice in writing given to the other party.
18. MISCELLANEOUS.
18.1 Amendments and Modifications. No amendment or
modification of this Agreement or any Exhibit or Schedule hereto
shall be valid unless made in writing and signed by the party to
be charged therewith.
18.2 Non-Assignability; Binding Effect. Other than
the assignment of rights by Eckler to the Merger Subsidiary as
and to the extent contemplated by Section 1 above, neither this
Agreement, nor any of the rights or obligations of the parties
hereunder, shall be assignable by any party hereto without the
prior written consent of all other parties hereto. Otherwise,
this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors
and permitted assigns.
18.3 Severability. In the event that any provision or
any portion of any provision of this Agreement shall be held
invalid, illegal or unenforceable under applicable law, the
remainder of this Agreement shall remain valid and enforceable,
unless such invalidity, illegality or unenforceability
substantially diminishes the rights and obligations, taken as a
whole, of any party hereunder.
18.4 Attorneys' Fees. In the event of suit to enforce
the terms of this Agreement, the prevailing party shall be
entitled to collect from the non-prevailing party reasonable
attorneys' fees, costs and expenses (including those incurred
through all trial, appellate and post-judgment collection
proceedings).
18.5 Governing Law; Jurisdiction. Except to the extent
that Applicable Law shall govern with respect to the Merger, this
Agreement shall be construed and interpreted and the rights
granted herein governed in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed
wholly within such State.
18.6 Effect of Headings. The Section headings used in
this Agreement and the titles of the Schedules hereto are
<PAGE>
included for purposes of convenience only, and shall not affect
the construction or interpretation of any of the provisions
hereof or of the information set forth in such Schedules.
18.7 Entire Agreement; Waivers. This Agreement
constitutes the entire agreement between the parties pertaining
to the subject matter hereof, and supersedes all prior agreements
or understandings as to such subject matter. No party hereto has
made any representation or warranty or given any covenant to the
other except as set forth in this Agreement and the Schedules and
Exhibits hereto. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any
other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
18.8 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
[Balance of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
on and as of the date first set forth above.
ECKLER INDUSTRIES, INC.
By:___________________________
Name:_________________________
Its: President
ECKLER ACQUISITION CORPORATION
By:_____________________________
Name:___________________________
Its: President
SMART CHOICE HOLDINGS, INC.
By:___________________________
Name: Thomas E. Conlan
Its: Executive Vice President
RALPH ECKLER:
______________________________
Ralph Eckler, Individually
THOMAS E. CONLAN:
______________________________
Thomas E. Conlan, Individually
GERALD C. PARKER:
______________________________
Gerald C. Parker, Individually
Exhibit 10.2 - Executive Employment Agreement between Ralph H.
Eckler and Registrant.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Employment
Agreement") is effective as of ____________________, 1996, by and
between SMART CHOICE HOLDINGS, INC., a Delaware corporation
("Company"), and RALPH H. ECKLER, an individual ("Executive").
W I T N E S S E T H:
WHEREAS, the Company believes that the attraction and
retention of key employees such as the Executive is essential to
the Company's growth and success; and
WHEREAS, Executive has extensive experience relating to the
automobile industry and to the pre-merger business operations of
Eckler Industries, Inc., a corporation that intends to acquire
all of the Company's common stock; and
WHEREAS, the Company desires to employ Executive as its Vice
President for Corporate Integration, and Executive is willing and
able to render his services to the Company from and after the
date hereof, on the terms and conditions of this Employment
Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals,
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby
covenant and agree as follows:
Section 1. Employment.
a. Subject to the terms and conditions of this
Employment Agreement, the Company shall retain the Executive as
its Vice President for Corporate Integration, and the Executive
shall render services to the Company in an executive capacity.
Executive shall report to the President of the Company and shall
be responsible for assisting the Company with the integration of
the Company's business with the business of Eckler Industries,
Inc.
b. Throughout the period of his employment hereunder,
the Executive shall: (i) devote sufficient time to perform
his duties; and (ii) observe and carry out such reasonable rules,
regulations, policies, directions and restrictions as may be
established from time to time by the Board, including but not
limited to the standard policies and procedures of the Company as
in effect from time to time.
Section 2. Term of Employment. Subject to prior
termination in accordance with the terms and conditions of this
Employment Agreement, the term of employment of Executive by the
Company pursuant to this Employment Agreement shall be for an
<PAGE>
initial period of one (1) year (the "Employment Period")
commencing on the date of the execution of a definitive merger
agreement between the Company and Eckler Industries, Inc. (the
"Commencement Date"), and ending one (1) year thereafter.
Section 3. Company's Principal Place of Business. It is
anticipated that the Company's principal place of business will
be located in the central Florida area, or such other area as may
be designated by the Company's Board.
Section 4. Compensation. During the Employment Period,
subject to all the terms and conditions of this Employment
Agreement and as compensation for all services to be rendered by
Executive under this Employment Agreement, the Company shall pay
to the Executive $800,000 which shall be payable (i) $200,000 on
January 15, 1997; and (ii) the balance on the earlier of the date
of completion of a secondary offering of equity securities by the
Company or April 30, 1997. The Company at its option may pay
amounts payable by the Company under this Section 4 by issuing to
the Executive that number of shares of Common Stock of the
Company equal to the amount payable by the Company hereunder,
divided by the Market Price of the Company's Common Stock
(hereinafter defined) on the date of payment, less 10% of the
Market Price of the Company's Common Stock on such date. For
purposes of this Agreement, the Market Price of the Company's
Common Stock shall equal the last sale price of the Company's
Common Stock on NASDAQ as of the time of such determination.
Section 5. Fringe Benefits. Executive shall be entitled
to such benefits in accordance with the Company's practices
covering executive personnel, but only to the extent that
Executive is not provided with such benefits from an affiliate,
subsidiary, parent or related company of the Company.
Section 6. Termination.
a. Mutual Termination. This Employment Agreement may
be terminated upon mutual written agreement of the Company and
the Executive;
b. By Executive. This Employment Agreement may be
terminated at the option of the Executive, upon fourteen (14)
days' prior written notice to the Company, in the event that the
Company shall (i) fail to make any payment to the Executive
required to be made under the terms of this Employment Agreement
within thirty (30) days after payment is due, or (ii) fail to
perform any other material covenant or agreement to be performed
by it hereunder or take any action prohibited by this Employment
Agreement, and fail to cure or remedy same within thirty (30)
days after written notice thereof to the Company;
c. By the Company For Cause. This Employment
Agreement may be terminated at the option of the Company, upon
written notice to the Executive, "for cause" (as hereinafter
<PAGE>
defined), or in the event of the "permanent disability" (as
defined and provided for in Section 8) or death of the Executive
as provided for in Section 8). The Company may terminate
(i) As used herein, the term "for cause"
shall mean and be limited to: (A) any material breach of this
Employment Agreement by the Executive which in any case is not
fully corrected within thirty (30) days after written notice of
same from the Company to the Executive; (B) neglect by the
Executive of his duties and responsibilities hereunder; (C) any
fraud, theft, conversion, insubordination, criminal misconduct,
breach of fiduciary duty, dishonesty, or gross and willful
misconduct by the Executive in connection with the performance of
his duties and responsibilities hereunder; (D) the Executive
being legally intoxicated (alcohol or drugs) during business
hours or while on call, or being habitually drunk or addicted to
drugs (provided that this shall not restrict the Executive from
taking physician-prescribed medication in accordance with the
applicable prescription); (E) the commission by the Executive of
any crime of moral turpitude, or any other action by the
Executive which may materially impair or damage the reputation of
the Company; or (F) habitual breach by the Executive of any of
the material provisions of this Employment Agreement (regardless
of any prior cure thereof).
d. Effect of Termination For Cause. In the event of
termination for any of the reasons set forth in this Section 7
(except as otherwise provided for hereinafter with respect to
"permanent disability", death or "without cause") Executive shall
be entitled to no further compensation, Base Salary or other
benefits under this Employment Agreement, except as to that
portion of any unpaid Base Salary or other benefits accrued and
earned by him hereunder up to and including the effective date of
termination.
Section 7. Termination by Reason of Death; Permanent
Disability; or Without Cause.
a. If the Company terminates Executive "without
cause" which shall mean for any reason other than as set forth in
Section 7(c)(i), or in the event of Executive's death or
"permanent disability" (as defined below), Executive shall be
entitled to receive an amount equal to the full compensation to
which he would otherwise be entitled under this Employment
Agreement (just as if Executive had not been so terminated and
was continuing to serve as an employee hereunder for the full
term of this Employment Agreement) (the "Severance Payment").
Such Severance Payment shall be payable in a single lump sum
distribution (without any present value adjustment) to Executive
or his estate, as the case may be, no later than ninety (90) days
from the effective date of such termination.
<PAGE>
b. Payment in the Event of Permanent Disability. For
purposes of this Employment Agreement, Executive's "permanent
disability" shall be deemed to have occurred after one hundred
twenty (120) days in the aggregate during any consecutive twelve
(12) month period, or after ninety (90) consecutive days, during
which one hundred twenty (120) or ninety (90) days, as the case
may be, Executive, by reason of his physical or mental disability
or illness, shall have been unable to discharge fully his duties
under this Employment Agreement. The date of permanent
disability shall be the one hundred twentieth (120th) or
ninetieth (90th) day, as the case may be. In the event
Executive, after receipt of notice from Executive, shall dispute
that his permanent disability shall have occurred, he shall
promptly submit to a physical examination by a qualified
practicing physician selected and paid for by the Company (and
reasonably acceptable to the Executive). Unless such physician
shall issue a written statement to the effect that in his
opinion, based on his diagnosis, Executive is capable of resuming
his employment and devoting his full time and energy to
discharging his duties within ten (10) days after the date of
such statement, such permanent disability shall be deemed to have
occurred without further dispute by Executive or Company. For
the purposes of this Employment Agreement, the term hereof is not
renewable and no benefits or base salary shall be payable after
the expiration of this Employment Agreement.
Section 8. Confidential Information. Executive recog
nizes and acknowledges that the Company has, through the
expenditure of substantial time, effort and money, developed and
acquired certain confidential information and trade secrets which
have become of great value to the Company in its creation,
development and operations. Executive further acknowledges and
understands that in the course of performing his duties for the
Company, Executive has had and will have access to the trade
secrets and confidential information of the Company. Executive
agrees that during the course of his employment and at any time
after the termination or expiration thereof he will not make any
independent use of, publish or disclose, or authorize anyone to
publish or disclose, to any other person or organization, any of
the Company's trade secrets and confidential information, except
as required in the course of his employment with the Company or
by law. Upon request of the Company and, in any event upon the
cessation of Executive's employment with the Company, whether
with or without cause, Executive will promptly return all
tangible expressions of trade secrets and confidential
information in his possession and control and all copies thereof.
As used herein, the term "trade secrets and confidential
information" shall mean client lists, applicant lists, and other
related client and applicant data, computerized compilation of
such data, training materials and information, policy and
procedure manuals, video and audio recordings of training and
operation methods, sales, services, support and marketing
practices and operations, advertising themes, information
concerning possible acquisition candidates, formats of
<PAGE>
advertising and other business methods, and techniques, processes
and financial information of the Company or any subsidiary or
affiliate of the Company, all of which are not generally known to
the trade or industry and which will be of competitive use by
them. "Trade secrets and confidential information" shall not
include intangible information which is generally known and used
by persons with training and experience comparable to Executive
as of the date of this Employment Agreement and all intangible
information which is common knowledge in the industry or
otherwise legally in the public domain.
Executive further agrees that the restrictions set
forth in this Section 9 are in addition to, and not in lieu of,
any other restrictions or obligations placed upon him, and/or any
rights or remedies available to the Company, by any statute or at
common law.
Section 9. Covenant not to Compete. Executive covenants
and agrees that, in order to protect the Company's legitimate
business interest in its trade secrets and confidential
information, special training, goodwill, and substantial
relationships with prospective or existing customers or suppliers
during the Employment Period and for a period of twelve (12)
months following the expiration or termination of this Employment
Agreement or any renewal of the Employment Agreement, however the
same shall occur, whether voluntary or involuntary, Executive
will not, without the prior written consent of the Company,
directly or indirectly,
a. engage, whether by virtue of stock ownership,
management responsibilities or otherwise, in companies,
businesses, organizations and/or ventures which manufacture,
market or distribute products which are competitive with any of
the "Company's Products" (as hereinafter defined) within a 50
mile radius of any location where the Company is currently
conducting business, or within a 50 mile radius of any location
where the Company has conducted or has definite plans to conduct
business twelve (12) months before or after the termination or
expiration of this Employment Agreement; or
b. become interested, directly or indirectly, whether
as principal, owner, stockholder, partner, agent, officer,
director, employee, salesman, joint venturer, consultant,
advisor, independent contractor or otherwise, in any person,
firm, partnership, association, venture, corporation or entity
engaging directly or indirectly in any of the activities
described in Subsection 10a. above; or
c. knowingly solicit the employment of any of the
Company's Personnel (as hereinafter defined).
d. For purposes of this Employment Agreement:
<PAGE>
(i) the term "Company" shall include any
subsidiary, any affiliates, any successor in interest whether by
sale, merger, liquidation or the like, and any of the Company's
other subsidiaries and affiliates;
(ii) the term "Company Personnel" shall mean
any person employed by the Company or any subsidiary of the
Company or any of its affiliates at any time through the end of
the term of this Employment Agreement, but excluding any person
who has left such employment for a continuous period exceeding
one (1) year;
(iii) the term "Company's Products" shall
mean any present or future (future being limited to the term of
this Employment Agreement and any and all extensions thereof)
product or service (i) being sold by the Company or (ii) any
product designed, engineered, manufactured, assembled, or
enhanced (whether or not sold) by the Company.
e. None of the foregoing shall prevent Executive from
holding up to two percent (2%) in the aggregate of any class of
securities of any entity engaged in the prohibited activities
described above, provided that, such securities are listed on a
national securities exchange or registered under Section 12(g) of
the Securities and Exchange Act of 1934.
f. The parties acknowledge that the Company intends
to undergo a major restructuring by way of a merger, stock for
stock exchange, reorganization or otherwise, and may, thereafter,
seek to assign this Employment Agreement to such new or resulting
entity. Executive expressly consents and agrees to such an
assignment, without the need for any further writing, approval or
consent by Executive.
Section 10. Remedies in Event of Breach.
a. Injunctive Relief. The parties acknowledge that
each would be irreparably harmed by any breach of the covenants
contained in Sections 9 and 10 of this Employment Agreement, and
that either party's remedy at law for any breach by the other
party of their obligations under Sections 9 and 10 of this
Employment Agreement would be inadequate, and would be impossible
to ascertain and therefore, in the event of the breach or
threatened breach of any obligations under 9 and 10 of this
Employment Agreement, either party, in addition to any and all
other remedies at law or in equity, shall have the right to
enjoin the other party from any threatened or actual activities
in violation thereof; and the parties hereby consent and agree
that temporary and permanent injunctive relief may be granted in
any proceedings which might be brought to enforce any such
covenants without the necessity of proof of actual damages and
without the necessity of posting bond. In the event either party
does apply for such injunction, the other party shall not raise
<PAGE>
as a defense thereto that such applying party has an adequate
remedy at law.
b. Damages; Accounting for Profits. In addition to
any injunctive relief that may be granted to the Company or
Executive for breach of this Employment Agreement, the Company
and Executive shall be entitled to recover all damages, including
reasonable attorneys' fees and costs (including paralegals'
fees), sustained or incurred by the Company or Executive by
reason of a violation or threatened violation of the terms of
this Employment Agreement, and to receive such other remedy or
remedies as the court determines is appropriate. Executive
covenants and agrees that, if he violates any of his covenants or
agreements under Sections 9 and 10 hereof, the Company shall be
entitled to an accounting and repayment of all profits,
compensations, commissions, remunerations or benefits which
Executive directly or indirectly has realized or may realize as a
result of, growing out of, or in connection with, any such
violation; such remedy shall be in addition to and not in
limitation of any injunctive relief or any other rights or
remedies to which the Company is or may be entitled at law or in
equity or under this Employment Agreement.
Section 11. Reasonableness. Executive has carefully read
and considered the provisions of Sections 9 and 10 hereof and,
having done so, agrees that the restrictions set forth in such
sections, including, but not limited to, the time period of
restriction, the geographical areas of restriction, and the
definition of Company Products set forth therein, are fair and
reasonable and are reasonably required for the protection of the
legitimate business interests of the Company, and further that
the geographical areas of restriction set forth therein
accurately reflect the area in which he will be actively engaged
in the performance of services.
Section 12. No Inconsistent Obligations. Executive
represents and warrants that no action required of him under this
Employment Agreement or any other agreements or understandings,
written or oral, entered into with the Company will conflict
with, breach or otherwise impair any previously existing
agreements or understandings, whether written or oral, into which
Executive has entered with other persons or entities, including
agreements with respect to proprietary information or non-
competition.
Section 13. Notices. Any notice to be given hereunder
shall be deemed to be given when delivered by hand or by
overnight courier to the party for whom the notice is intended,
or three (3) days after notice is placed in the U.S. mail
properly addressed to the party for whom notice is intended, at
the following address:
<PAGE>
If to the Company: Smart Choice Holdings, Inc.
5200 South Washington Avenue
Titusville, Florida 32780
Attention: Thomas E. Conlan
If to Executive: Ralph H. Eckler
5200 South Washington Avenue
Titusville, Florida 32780
Section 14. Binding Effect and Governing Law. This
Employment Agreement supersedes all prior understandings and
agreements between the parties with respect to the subject matter
hereof. This Employment Agreement shall be binding upon the
legal representatives, heirs, distributees, successors and
assigns of the parties. The Employment Agreement contains the
entire agreement of the parties, and may not be changed orally
but only in writing signed by the party against whom enforcement
of any such change is sought. It is agreed that a waiver by
either party of a breach of any provision of this Employment
Agreement shall not be operated or be construed as a waiver of
any subsequent breach by that same party. This Employment
Agreement shall be governed by the laws of the State of Florida.
Section 15. Severability. In the event that any terms or
provisions of this Employment Agreement shall be held to be
invalid or unenforceable by a court of competent jurisdiction,
such invalidity or unenforceability shall not affect the validity
or enforceability of the remaining terms and provisions hereof.
Section 16. Assignability. The rights or obligations
contained in this Employment Agreement shall not be assigned,
transferred, or divided in any manner by Executive or Company,
without the prior written consent of the other; provided however,
that nothing in this Section 16 shall preclude: (i) Executive
from designating a beneficiary to receive any benefits hereunder
upon his death, or the executors, administrator or other legal
representatives of Executive or his estate from assigning any
rights hereunder to the person(s) entitled thereto; or (ii) the
Company's right to assign this Employment Agreement to a related
entity subsequent to any merger, stock for stock exchange,
reorganization, or otherwise as set forth in Section 10f.
Notwithstanding the foregoing, this Employment Agreement shall be
binding on any entity which by purchase of assets, merger, or
otherwise, becomes a successor to the business of the Company.
Section 17. Director & Officer Liability Insurance. The
Company shall use its best reasonable efforts to obtain a policy
of Director & Officer Liability Insurance of a type that is usual
and customary for businesses similar to that of the Company;
provided, however, that the Company shall not be required to
obtain such a policy if in its judgment such a policy cannot be
obtained without the payment of an unreasonable policy premium.
<PAGE>
Section 18. Headings. The headings of paragraphs herein
are included solely for convenience of reference and shall not
control the meaning, interpretation, or performance of any of the
provisions of this Employment Agreement.
Section 19. Entire Agreement. This Agreement expresses
the entire understanding of the Company and Executive with
respect to the subject matter of this Agreement. Nothing in this
Agreement shall alter, amend, modify, delete, rescind or
otherwise waive any terms or conditions to which Executive may be
subject.
IN WITNESS WHEREOF, the parties hereto have caused this
Employment Agreement to be executed the day and year first above
written.
COMPANY:
SMART CHOICE HOLDINGS, INC.
By:
Thomas E. Conlan
As its: Secretary/Treasurer
EXECUTIVE:
___________________________________
Ralph H. Eckler
Social Security Number:
Exhibit 99.1 - Press Release dated January 29, 1997.
FOR IMMEDIATE RELEASE
CONTACT: Dick Kosmicki
The Dilenschneider Group
212-922-0900
ECKLER INDUSTRIES SIGNS DEFINITIVE MERGER AGREEMENT WITH
SMART CHOICE HOLDINGS, INC.
TITUSVILLE, FL., January 29, 1997 - Eckler Industries,
Inc. (NASDAQ:ECKL) of Titusville, FL. Announced today that
it has completed the merger with Smart Choice Holdings,
Inc., of Windermere, FL. Eckler has issued approximately
6.5 million shares of its common stock (such number of
shares being subject to certain post closing adjustments) in
exchange for all of the common stock of Smart Choice.
Eckler is one of the first publicly held companies in
the automobile dealership business.
(more)
<PAGE>
The merger will result in Eckler's name being changed
to Smart Choice Holdings, Inc. The new public company, will
be headquartered in Titusville, FL.
The new public company will be reorganized into a
holding company that will encompass four divisions:
Corvette Parts and accessories, new car sales, used car
sales and insurance and auto finance.
Laidlaw Equities, a New York-based investment banking
firm representing Eckler, has provided its opinion stating
that the merger is fair to the Eckler shareholders, from a
financial point-of-view.
"Based upon the fairness opinion of Laidlaw, we believe
we are providing our shareholders a significant opportunity
to increase the value of our company," said Ralph Eckler,
president of Eckler
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<PAGE>
Industries. He added, "We are all very excited to be part
Gary R. Smith, Smart Choice's new president said: "The
closing of the merger has positioned Smart Choice to become
a significant competitor in the used and new car business in
Florida."
"The automobile business," Mr. Smith added, "one of
America's largest industries, is undergoing significant
changes, and with the advent of public ownership of
automobile dealerships, a major consolidation is underway.
There have been several recent public offerings of
automobile dealership groups that have received widespread
acceptance by the financial community and Smart Choice is
poised to take advantage of this consolidation opportunity
with its acquisition strategies."
(more)
<PAGE>
Smart Choice believes that it is the largest operator
of "Buy Here, Pay Here" used car dealerships in Florida.
Smart Choice is a fully integrated automobile sales,
service, leasing, financing, and insurer of new and used
automobiles. The company intends to continue to acquire new
and used dealerships in Florida and throughout the Southeast
U.S.
Eckler Industries is a leading supplier of Corvette
parts and accessories with over 95,000 customers.
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