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 (Date of earliest event reported): June 30, 1997
SMART CHOICE AUTOMOTIVE GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
FLORIDA 1-14082 59-1469577
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
5200 SOUTH WASHINGTON AVENUE, TITUSVILLE, FLORIDA 32780
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (407) 269-9680
N/A
(Former name, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 30, 1997, Smart Choice Automotive Group, Inc. (the
"Registrant") acquired substantially all of the assets owned or used by Roman
Fedo, Inc. and Fedo Finance, Inc. (both Florida corporations ("the Sellers")) in
selling, leasing and financing the sale or lease of used automobiles and other
consumer vehicles (the "Business"). The following summary of the transaction is
qualified in its entirety by the more detailed information contained in the copy
of the Asset Purchase Agreement attached as Exhibit 10.1 to this Current Report.
Included among the assets acquired are accounts receivable, inventory,
property, plant and equipment, and goodwill. The Registrant will use the assets
in the sale and financing of used automobiles and other consumer vehicles.
As consideration for the assets acquired, the Registrant (i) paid the
Sellers cash in the aggregate amount of approximately $268,000 and (ii) issued
to the Sellers 225,000 shares of duly authorized, validly issued, fully paid and
nonassessable shares of the Registrant's common stock outstanding, $.01 par
value (the "Shares"). In addition, the Registrant assumed certain trade payables
and other ordinary course indebtedness of the Sellers. The amount of
consideration paid by the Registrant for the assets of the Sellers was
determined through arms' length negotiations between representatives of the
Registrant and the Sellers.
The cash portion of the transaction was financed through the proceeds
of a credit facility (the "Credit Facility") made available to the Registrant in
February 1997 by Finova Capital Corporation. The Credit Facility provides for a
$35 million revolving line of credit, and matures in 1999. Borrowings under the
Credit Facility bear interest at a rate equal to the prime rate plus 3.0 points.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of the acquired Business will be
provided within the next sixty (60) days as an amendment to this filing.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed consolidated
balance sheet and income statement of the Registrant,
will be provided within the next sixty (60) days as
an amendment to this filing.
EXHIBIT DESCRIPTION
10.1 Asset Purchase Agreement, dated as of
June 30, 1997 between Smart Choice
Automotive Group, Inc., and Roman Fedo,
Inc., Fedo Finance, Inc. and Roman Fedo.
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SIGNATURE
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.
SMART CHOICE AUTOMOTIVE GROUP, INC.
By: /S/ NEAL HUTCHINSON
Title: CORPORATE COUNSEL
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EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
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10.1 Asset Purchase Agreement, dated as of June 30, 1997
between Smart Choice Automotive Group, Inc. and
Roman Fedo, Inc., Fedo Finance, Inc. and Roman Fedo
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
SMART CHOICE AUTOMOTIVE GROUP, INC.
AND
ROMAN FEDO, INC.
FEDO FINANCE, INC.
AND
ROMAN FEDO
DATED JUNE 30, 1997
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT") entered into this 30th
day of June, 1997 by and among Smart Choice Automotive Group, Inc., a Florida
corporation (the "BUYER"), Roman Fedo, Inc., a Florida corporation, and Fedo
Finance, Inc., a Florida corporation (collectively, the "SELLERS"), and Roman
Fedo (the "SHAREHOLDER"). Terms used herein and not otherwise defined shall have
the meanings set forth in ARTICLE IX.
RECITALS
A. The Sellers are engaged in a business consisting of selling, leasing
and financing the sale or lease of used automobiles and other consumer vehicles
(the "BUSINESS").
B. The Shareholder is the record and beneficial owner of all of the
issued and outstanding capital stock of the Sellers, and as such will derive
substantial benefit from the transactions contemplated by this Agreement.
C. The Sellers desire to sell substantially all of their assets and
properties and the Business to the Buyer, and the Buyer desires to purchase such
assets and properties and the Business as a going concern from the Sellers, all
upon the terms and conditions set forth in this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, the Sellers hereby sell, transfer, convey, assign and deliver to the
Buyer at Closing (as defined in SECTION 1.10), and the Buyer hereby purchases
and receives from the Sellers, the Finance Contracts listed on SCHEDULE 1.1(A),
the Inventory, the tangible assets, parts, properties (not including buildings)
of every kind and description, whether real, personal or mixed, tangible or
intangible, all of the fixed assets, wherever located (except those assets of
the Sellers which are specifically excluded as provided in SECTION 1.2 hereof),
the business as a going concern and all goodwill associated therewith as the
same shall exist on the Closing Date, whether or not appearing on the Current
Balance Sheet (collectively, the "PURCHASED ASSETS"). Without limiting the
generality of the foregoing, the Purchased Assets shall include the following:
(a) all Finance Contracts of the Sellers as listed in SCHEDULE
1.1(A), including receivables arising as a result of contracts in transit and
installment sales contracts;
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(b) other receivables of the Sellers, including trade account
receivables, notes receivables (other than Finance Contracts), insurance
proceeds, service contract providers, vendors or suppliers of the Sellers,
rights to receive payment (including any related guaranties, security deposits
or other collateral therefor) under credit agreements, finance leases and other
such agreements (collectively, the "RECEIVABLES");
(c) all inventories of the Sellers, including without
limitation, all inventories of parts and accessories, used vehicles and
contracts in transit (net of drafts in transit) as shown in SCHEDULE 1.1(C)
(collectively, the "INVENTORY");
(d) all goods, machinery, equipment, tools, supplies,
furniture, furnishings, trade fixtures and fixed assets located at or on the
Owned Properties or Leased Premises regardless of whether or not the same may be
affixed to the Owned Properties or the Leased Premises or may be considered to
be fixtures under applicable real property law and other fixed assets to the
Sellers (does not include buildings) as shown in SCHEDULE 1.1(D) (the "FIXED
ASSETS");
(e) all of the interest, rights and benefits accruing to the
Sellers under any sales orders, sales contracts, service agreements, extended
warranty contracts, purchase orders and purchase commitments made for the
benefit of the Sellers, all other agreements to which the Sellers are a party or
by which they are bound and other causes in action, or other contract rights,
commitments and claims of the Sellers including rights as lessee under the Real
Estate Leases, any equipment leases and vehicle lease, and rights under
manufacturer's warranties and other rights of every kind of the Sellers;
(f) all software, books, records, printouts, drawings, data,
files, notes, notebooks, accounts, invoices, correspondence and memoranda
relating to the Purchased Assets and or the Business of the Sellers, and all
operating data, including without limitation, all data pertaining to customer
lists and records, financial, accounting and credit records, budgets and other
similar documents and records;
(g) all of the proprietary rights of the Sellers, including
without limitation, all trademarks, tradenames, customer list, supplier list,
technical information, patents, patent applications, licenses thereof, trade
secrets, technology, know-how, formulae, designs and drawings, computer
software, slogans, copyrights, processes, operating rights, and other such
knowledge and information constituting the "know-how" of the Sellers, and the
goodwill of the Sellers, other licenses and permits and other similar intangible
property rights relating to the products or business of the Sellers;
(h) all prepaid and deferred items of the Sellers including
without limitation, prepaid rentals, insurance, taxes, and unbilled charges and
deposits relating to the operations of the Sellers; and
(i) all other rights and assets of any kind, tangible or
intangible, of the Sellers, whether or not reflected in the Sellers' financial
statements or on its books and records.
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1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary set
forth in SECTION 1.1, the Purchased Assets shall exclude the corporate minute
books of the Sellers, all Finance Contracts not listed on Schedule 1.1(A), and
all Inventory not listed on Schedule 1.1(C) (the "EXCLUDED ASSETS").
1.3 ASSUMED LIABILITIES. At the Closing, the Buyer shall assume only
those liabilities listed in SCHEDULE 1.3(A), (C) and (E) (collectively, the
"ASSUMED LIABILITIES"):
(a) all trade accounts payable by the Sellers which are set
forth on SCHEDULE 1.3(A) hereto;
(b) all payroll and related federal and state withholding
taxes for the Sellers' payroll which accrue from and after the Closing Date; if
any;
(c) all liabilities of the Sellers from and after the date
hereof as lessee under its outstanding lease (the "REAL ESTATE LEASE") for its
business premises (the "LEASE PREMISES") and those outstanding vehicle and
equipment leases or financing agreements listed on SCHEDULE 1.3(C) hereto;
(d) all ongoing customer repair obligations incurred by the
Sellers prior to the Closing Date in the normal course of business (other than
any claims, repairs or other obligations related to fraud or fraudulent
activities); and
(e) all other executory contracts, service contracts, orders
and commitments which in any instance are for the purchase of inventory and/or
supplies or the rendition of services to the Sellers, which have been entered
into by the Sellers in the normal course of business and are listed on SCHEDULE
1.3(E) hereto.
Annexed hereto as SCHEDULES 1.3(A), (C) and (E) are correct and complete
listings of all of the Assumed Liabilities.
1.4 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
contained in SECTION 1.3 above, the Buyer shall not assume, or become in any way
liable for, the payment or performance of any debts, liabilities or obligations
(absolute or contingent) of the Sellers (a) in the nature of customer claims,
employee claims or other contingent liabilities arising out of or relating to
any operations of the Sellers prior to the date hereof, except to the extent
specifically assumed pursuant to SECTION 1.3 above, (b) relating to any lease
obligations of any kind other than obligations for periods on and after the date
hereof under the Real Estate Lease, (c) under or relating to any lien or other
arrangement under which the Sellers are or may be borrowers, (d) except to the
extent assumed pursuant to SECTION 1.3(b) above, relating to any federal, state
or local income, franchise, sales, use, property, excise, transfer or other
taxes payable by or in respect of the Sellers, including but not limited to any
such taxes which may be assessable against the Sellers arising out of, in
connection with or as a result of the transactions contemplated by this
Agreement and/or the consummation thereof, (f) relating to or arising out of any
pending claims, actions, arbitrations and/or other proceedings against the
Sellers, (g) relating to recapture of any depreciation deduction or investment
tax credit of the Sellers, (h) under or in
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respect of any benefit plans now or heretofore maintained by the Sellers in
respect of or for the benefit of any of its employees, or (i) not specifically
assumed by the Buyer in SECTION 1.3 above.
1.5 PURCHASE PRICE. The purchase price for the Purchased Assets
(collectively, the "PURCHASE Price") is the sum of (a) $268,000 cash less the
amount required to pay all of the Sellers' other indebtedness for borrowed
money, the net amount being paid to the Sellers by certified or bank cashier's
check and delivered to the Sellers concurrently with the execution and delivery
of this Agreement or by wire transfer of immediately available funds to the
Sellers' designated account on the date hereof; and (b) 225,000 shares of the
duly authorized, validly issued, fully paid and nonassessable shares of Buyer's
Common Stock outstanding, $.01 par value, (the "SHARES").
1.6 NET PRICE. The foregoing Purchase Price for the Purchased Assets
shall be in addition to the assumption of the Assumed Liabilities.
1.7 ALLOCATION OF CONSIDERATION. The Purchase Price shall be allocated
among the Purchased Assets in accordance with SCHEDULE 1.7 hereto.
1.8 APPLICATION OF CERTAIN PROCEEDS. To the extent required in order to
permit the transfer and delivery of the Purchased Assets free and clear of all
liens, pledges, claims, security interests and encumbrances, the Sellers shall
utilize all or a portion of the Purchase Price to repay any obligations for
which any of the Purchased Assets constitutes collateral (including, without
limitation, any line of credit or other arrangement under which the Sellers are
or may be a borrower).
1.9 REGISTRATION RIGHTS AGREEMENT.
(a) "PIGGY BACK" REGISTRATIONS.
(i) If at any time the Buyer shall determine to register
any of its securities, either for its own account or the
account of a security holder or holders exercising their
registration rights, other than a registration relating solely
to employee benefit plans, or a registration on any
registration form which does not permit secondary sales or
does not include substantially the same information as would
be required to be included in a registration statement
covering the sale of Registrable Securities, the Buyer shall:
(ii) Promptly give to the Shareholder written notice
thereof (which shall include the number of shares the Buyer or
other security holder proposes to register and, if known, the
name of the proposed underwriter); and
(iii) Use its best efforts to include in such registration
all the Registrable Securities specified in a written request
or requests, made by the Shareholder within ten (10) days
after the date of delivery of the written notice from the
Buyer described in clause (i) above. If the underwriter
advises the Buyer that marketing considerations require a
limitation on the number of shares offered
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pursuant to any registration statement, then the Buyer may
offer all of the securities it proposes to register for its
own account or the maximum amount that the underwriter
considers saleable and such limitation on any remaining
securities that may, in the opinion of the underwriter, be
sold will be imposed PRO RATA among all shareholders who are
entitled to include shares in such Registration Statement
according to the number of Registrable Securities each such
shareholder requested to be included in such registration
statement.
(iv) The Buyer shall select the underwriter for an
offering made pursuant to this SECTION 1.9(A).
(b) EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to SECTION 1.9(A) shall be paid by the Buyer. All Selling Expenses
incurred in connection with any such registration, qualification or compliance
shall be borne by the holders of the securities registered, pro rata on the
basis of the number of their shares so registered.
(c) REGISTRATION PROCEDURES. In the case of each registration
effected by the Buyer pursuant to this Agreement, the Buyer shall keep the
Shareholder advised in writing as to the initiation of each registration and as
to the completion thereof. At its expense, the Buyer shall do the following for
the benefit of the Shareholder:
(i) Use its best efforts to keep such registration
effective for a period of one hundred twenty (120) days or
until the Shareholder has completed the distribution described
in the registration statement relating thereto, whichever
first occurs, and amend or supplement such registration
statement and the prospectus contained therein from time to
time to the extent necessary to comply with the Securities Act
and applicable state securities laws;
(ii) Use its best efforts to register or qualify the
Registrable Securities covered by such registration under the
applicable securities or "blue sky" laws of such jurisdictions
as the Shareholder may reasonably request; provided, that the
Buyer shall not be obligated to qualify to do business in any
jurisdiction where it is not then so qualified or otherwise
required to be so qualified or to take any action which would
subject it to the service of process in suits other than those
arising out of such registration;
(iii) Furnish such number of prospectuses and other
documents incident thereto as a the Shareholder from time to
time may reasonably request;
(d) INDEMNIFICATION.
(i) The Buyer shall, and hereby does, indemnify the
Sellers and the Shareholder, each of its officers and stockholders, and
each person controlling such person within the meaning of the
Securities Act, with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each
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underwriter, if any, and each person who controls such underwriter
within the meaning of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other
document (including any related registration statement, notification or
the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by the
Buyer of the Securities Act or the Exchange Act or the securities act
of any state or any rule or regulation thereunder applicable to the
Buyer and relating to action or inaction required of the Buyer in
connection with any such registration, qualification or compliance, and
shall reimburse the Sellers and the Shareholder, each of its officers,
directors and partners, and each person controlling such person, each
such underwriter and each person who controls any such underwriter, for
any legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or
action, whether or not resulting in any liability, provided that the
Buyer will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on
any untrue statement (or alleged untrue statement) or omission (or
alleged omission) based upon written information furnished to the Buyer
by such person or underwriter and stated to be specifically for use
therein.
(ii) The Sellers and the Shareholder shall, if Registrable
Securities held by him are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify
the Buyer, each of its directors and officers and each underwriter, if
any, of the Buyer's securities covered by such a registration
statement, each person who controls the Buyer or such underwriter
within the meaning of the Securities Act and the rules and regulations
thereunder, the Sellers and the Shareholder and each of their officers,
directors and partners, and each person controlling such person,
against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other
document, or any 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 Buyer and the
Sellers' and the Shareholder's directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, whether or not resulting
in liability, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity
with written information furnished to the Buyer by such Holder and
stated to be specifically for use therein.
(iii) Each party entitled to indemnification under this
SECTION 1.9(D)(III) (the "INDEMNIFIED PARTY") shall give notice to the
party required to provide
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indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, but the failure of any Indemnifying Party to
give such notice shall not relieve the Indemnifying Party of its
obligations under this SECTION 1.9(D)(III) (except and to the extent
the Indemnifying Party has been prejudiced as a consequence thereof).
The Indemnifying Party shall be entitled to participate in, and to the
extent that it may elect by written notice delivered to the Indemnified
Party promptly after receiving the aforesaid notice from such
Indemnified Party, at its expense to assume, the defense of any such
claim or any litigation resulting therefrom, with counsel reasonably
satisfactory to such Indemnified Party, provided that the Indemnified
Party may participate in such defense at its expense, notwithstanding
the assumption of such defense by the Indemnifying Party, and provided,
further, that if the defendants in any such action shall include both
the Indemnified Party and the Indemnifying Party and the Indemnified
Party shall have reasonably concluded that there may be legal defenses
available to it and/or other Indemnified parties which are different
from or additional to those available to the Indemnifying Party, the
Indemnified Party or parties shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in
the defense of such action on behalf of such Indemnified Party or
parties and the fees and expenses of such counsel shall be paid by the
Indemnifying Party. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. Each Indemnified
Party shall (i) furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection with defense of such
claim and litigation resulting therefrom and (ii) shall reasonably
assist the Indemnifying Party in any such defense, provided that the
Indemnified Party shall not be required to expend its funds in
connection with such assistance.
1.10 TIME AND PLACE OF THE CLOSING. The Closing of the sale of the
Purchased Assets shall take place at the offices of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A., 1221 Brickell Avenue, Miami, Florida 33131, on
Monday, June 30, 1997, following the fulfillment or waiver of such conditions,
or such other date, time and place as the parties may mutually agree. Throughout
this Agreement such event is referred to as the "Closing" and such date and time
are referred to as the "Closing Date."
1.11 PROCEDURE AT THE CLOSING. At the Closing, the parties agree that
the following shall occur:
(a) The Shareholder shall have satisfied each of the conditions
set forth in ARTICLE IV and shall deliver to the Buyer the documents,
certificates, opinions, consents and letters required by ARTICLE IV.
(b) The Buyer shall have satisfied each of the conditions set
forth in ARTICLE IV and shall deliver the documents, certificates, consents and
letters required by ARTICLE IV.
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(c) The Buyer shall issue the shares of the Buyer's Common Stock
issuable pursuant to SECTION 1.5, registered in the name of the Sellers, and
shall deliver such shares in the following manner: (i) the Buyer shall set aside
and hold in accordance with SECTION 5.4 share certificates representing 22,500
shares of the Buyer's Common Stock (the "HELD BACK SHARES"), and (ii) the Buyer
shall deliver share certificates representing the balance of the shares of the
Buyer's Common Stock issuable in accordance with SECTION 1.5 to the Sellers. The
shares of the Buyer's Common Stock issuable pursuant to SECTION 1.5, including
the Held Back Shares, are referred to herein as the "BUYER'S SHARES."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS AND THE SHAREHOLDER
In connection with the sale of the Purchased Assets to the Buyer, the
Sellers and the Shareholder hereby jointly and severally make all of the
representations and warranties to the Buyer as shown in EXHIBIT A hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
In connection with the Buyer's purchase of the Purchased
Assets from the Sellers, the Buyer hereby makes all of the representations and
warranties to the Sellers and the Shareholder as shown in EXHIBIT B hereto.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 BILLS OF SALE; ASSUMPTION AGREEMENTS. The parties hereby confirm
that this Agreement shall be sufficient as a bill of sale in respect of the
Purchased Assets and as an assumption agreement in respect of the Assumed
Liabilities; PROVIDED, HOWEVER, that if, as and when required, or reasonably
requested by any party, the parties shall execute and deliver such assignment of
contracts, supplemental agreements, instruments, certificates of title and other
documents as may be necessary or appropriate in order to give effect to the
transfer of the Purchased Assets to the Buyer and the assignment to and
assumption by the Buyer of the Assumed Liabilities.
4.2 CERTIFICATES OF TITLE. Concurrently with the execution and
delivery of this Agreement, the Buyers are preparing a closing checklist of
items needed to be executed and delivered at closing, the Sellers are delivering
to the Buyer the properly endorsed certificates of title and/or other evidences
of ownership of all vehicles in the Inventory, and any and all vehicles
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constituting part of the Fixed Assets, all of which title documents shall
contain all necessary endorsements to effect the removal of any liens or
encumbrances on any such vehicles. The Buyer shall be responsible for effecting
the recordation of such certificates and the reissuance (as required) of new
certificates of title for such vehicles in the name of the Buyer and the Seller
shall be responsible for the payment of any applicable transfer taxes in
connection therewith.
4.3 AUDIT OF FINANCIAL STATEMENTS. The Sellers shall, from time to
time as and when requested by the Buyer from and after the date hereof, (a)
permit the Buyer and its accountants to have access to all books and records of
the Sellers for the purpose of performing an audit of the Sellers and/or the
Financial Statements sufficient to enable such accountants to render their
unqualified opinion on the financial statements of the Business for all periods
from and after January 1, 1994 in accordance with Regulation S-X promulgated
under the Securities Act of 1933, as amended, and (b) permit the Buyer and their
accountants to obtain copies of all work papers utilized or prepared by the
Sellers' accountants in connection with their review of the Financial
Statements, and consult with the Sellers' accountants as and to the extent
necessary or appropriate in connection with the preparation of the audited
financial statements contemplated by this SECTION 4.3.
4.4 OTHER ACTIONS. Each of the parties hereto shall use its
reasonable efforts to take, or cause to be taken, all appropriate actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated herein, including, without limitation, using its best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties to contracts
with the Sellers as are necessary for the consummation of the transactions
contemplated hereby. Each of the parties shall make on a prompt and timely basis
all governmental or regulatory notifications and filings required to be made by
it for the consummation of the transactions contemplated hereby. The parties
also agree to use their best efforts to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby.
4.5 SHAREHOLDER'S AND DIRECTORS' VOTE. The Shareholder, in executing
this Agreement, consents as a director and shareholder of the Sellers to the
Sellers' sale of the assets, other transactions contemplated hereby, and waive
notice of any meeting in connection therewith.
4.6 ENVIRONMENTAL ASSESSMENT. Buyer shall be entitled to conduct for
a period of thirty (30) days subsequent to the Closing Date, an environmental
assessment of the Owned Properties and Leased Premises (hereinafter referred to
as "ENVIRONMENTAL ASSESSMENT") that shall be in form and substance satisfactory
to the Buyer. The Environmental Assessment may include, but not be limited to, a
physical examination of the Owned Properties and Leased Premises, and any
structures, facilities, or equipment located thereon, soil samples, ground and
surface water samples, storage tank testing, review of pertinent records
(including but not limited to, off-site disposal records and manifests),
documents, and Licenses of the Sellers. If the
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Environmental Assessment identifies Recognized Environmental Conditions (as
defined by ASTM Standard Practice E-1527) which require remediation or further
evaluation under the Environmental Laws, then Buyer shall notify the Sellers and
the Shareholder in writing and the Sellers and the Shareholder shall fully
indemnify and hold harmless the Buyer for identified Recognized Environmental
Conditions and shall be financially responsible for the remediation of all
Recognized Environmental Conditions which remediation is, may or would be
required by any appropriate governmental agency. Buyer's failure or decision not
to conduct any such Environmental Assessment shall not affect any representation
or warranty of the Sellers or the Shareholder under this Agreement.
4.7 LANDLORD'S CONSENT. The Sellers and the Shareholder shall, within
30 days after the Closing Date, obtain the consent of all of the landlords of
the Leased Premises to the transactions contemplated hereby, which consent shall
be substantially in the form provided by the Buyer.
ARTICLE V
INDEMNIFICATION
5.1 GENERAL.
(a) Without prejudice to any rights of contribution as among the
Sellers and the Shareholder, the Sellers and the Shareholder shall jointly and
severally defend, indemnify and hold harmless the Buyer 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 the Buyer may incur, sustain or suffer
(collectively, "LOSSES") as a result of (i) any breach of any of the
representations and warranties herein or in any schedule(s) furnished by or on
behalf of the Sellers or the Shareholder under this Agreement, or the failure by
the Sellers or the Shareholder to perform, any of the covenants or agreements of
the Sellers or the Shareholder contained in this Agreement and other agreements
delivered at closing, or (ii) any failure by the Sellers to pay or perform when
due any of its retained liabilities.
(b) The Buyer shall defend, indemnify and hold harmless the Sellers
and the Shareholder 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 the Sellers
or the Shareholder may incur, sustain or suffer as a result of (i) any breach of
any of the representations and warranties herein, or the failure by the Buyer to
perform, any of the covenants or agreements of the Buyer contained in this
Agreement, or (ii) any failure by the Buyer to pay or perform when due any of
the Assumed Liabilities.
5.2 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 or parties in writing promptly 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
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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 an indemnifying party shall be duly notified of such dispute, the
parties shall attempt to settle and compromise the same and any rights of
indemnification established by reason of such settlement, compromise or
arbitration shall promptly thereafter be paid and satisfied by those
indemnifying parties obligated to make indemnification hereunder.
5.3 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. 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 fifteen (15) days
after receipt of such notice of settlement to object to the proposed compromise
or settlement, and if it does so object, the indemnifying party shall be
required to undertake, conduct and control, though 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. The
Buyer shall be entitled to set-off against the Notes, the Consulting Agreement
and/or the Real Estate Leases for all claims, losses, expenses and costs of
indemnification or for breach of any of the Sellers' and Shareholder's covenants
contained herein. The Sellers' and the Shareholder's representations and
warranties in SECTION 2.20 in EXHIBIT A hereto shall expire on the fifth
anniversary of the Closing Date. All of the other Sellers' and Shareholder's
representations and warranties shall survive the Closing.
5.4 SECURITY FOR THE INDEMNIFICATION OBLIGATION. As security for the
indemnification obligations contained in this ARTICLE V, at the Closing, the
Buyer shall set aside and hold certificates representing the Held Back Shares
issued pursuant to this Agreement. The Buyer may set off against the Held Back
Shares any Indemnifiable Damages, subject, however, to the following terms and
conditions:
(a) The Buyer shall give written notice to the holders of Held Back
Shares of any claim for Indemnifiable Damages or any other damages
hereunder, which notice shall set forth (i) the amount of Indemnifiable
Damages or other loss, damage, cost or expense which the Buyer claims
to have sustained by reason thereof, and (ii) the basis of such claim;
(b) Such set off shall be effected on the later to occur on the
expiration of thirty (30) days from the date of such notice or, if such
claim is contested, the date the dispute is resolved, and such set off
shall be charged proportionally against the shares set aside;
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(c) After the Held Back Shares are registered and any restrictions
on sale imposed under the Securities Act or otherwise are terminated,
the Shareholders may instruct the Buyer to sell some or all of the Held
Back Shares and the net proceeds thereof shall be substituted for such
Held Back Shares in any set off to be made by the Buyer pursuant to any
claim hereunder subject to continued compliance with any applicable SEC
and other regulations; and
(d) For purposes of any set off against the Held Back Shares
pursuant to this ARTICLE V, the shares of the Buyer's Common Stock not
sold as provided in clause (c) of this Section shall be valued at the
Average Closing Sale Price as of the Closing Date.
5.5 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES. Except with
respect to Held Back Shares sold pursuant to the foregoing SECTION 5.4(C) (and
in the case of such shares, until the same are transferred), all Held Back
Shares shall be deemed to be owned by the record holders thereof and the record
holders shall be entitled to vote the Held Back Shares; PROVIDED, HOWEVER, that,
there shall also be deposited with the Buyer subject to the terms of ARTICLE V,
all shares of the Buyer's Common Stock or other assets issued to or paid upon
Held Back Shares as a result of any share or other dividend or distribution or
share split with respect to the Held Back Shares. All share or other
distributions issued or paid upon Held Back Shares shall be delivered to the
person or entity entitled to receive such Held Back Shares together with the
delivery of such Held Back Shares pursuant to SECTION 5.6.
5.6 DELIVERY OF HELD BACK SHARES. The Buyer agrees to deliver to the
holders of the Held Back Shares, no later than thirty (30) days after the
Closing Date any Held Back Shares (and distributions thereon) then held by the
Buyer (or proceeds from the sale of Held Back Shares) unless there remains
unresolved any claim for Indemnifiable Damages or other damages hereunder as to
which notice has been given, in which event the Buyer shall retain such number
of Held Back Shares (and such amount of proceeds therefrom or distributions
thereon) as is sufficient to satisfy any such unresolved claim, as well as the
attorney fees and costs associated therewith, and shall release the remaining
Held Back Shares (and such remaining proceeds and distributions) to the holders
thereof; provided, however, if the Buyer has made no claim for damages hereunder
during the first thirty (30) days after the Closing Date, the Buyer shall
deliver the Held Back Shares (and such proceeds thereon) to the holders thereof,
promptly after such thirty (30) day period. Any Held Back Shares (and proceeds
from the sale of, or distributions on, Held Back Shares) remaining on deposit
after all such claims shall have been satisfied shall be returned to the holders
thereof promptly after the time of satisfaction.
5.7 ADJUSTMENT TO PURCHASE PRICE. All payments for Indemnifiable
Damages made pursuant to this ARTICLE V shall be treated as adjustments to the
Aggregate Consideration provided in SECTION 1.5.
5.8 NO BAR If the Held Back Shares are insufficient to set off any
claim for Indemnifiable Damages made hereunder (or have been delivered to the
holders prior to the making or resolution of such claim), then the Buyer may
take any action or exercise any remedy available to it by appropriate legal
proceedings to collect the Indemnifiable Damages.
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5.9 REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude the Buyer from asserting any other right, or
seeking any other remedies against the Sellers and the Shareholder.
ARTICLE VI
POST-CLOSING EVENTS
6.1 ANNOUNCEMENTS. No party hereto shall make any disclosure or
public announcement of the consummation of the transactions pursuant to this
Agreement, or of any of the terms thereof, without the prior review and approval
thereof by the other party, and such approval shall not be unreasonably withheld
or delayed.
6.2 FURTHER ASSURANCES. From time to time from and after the date
hereof, the parties will execute and deliver to one another any and all further
agreements, instruments, certificates and other documents as may reasonably be
requested by any other party in order more fully to consummate the transactions
contemplated hereby, and to effect an orderly transition of the Business to the
Buyer hereunder. Without limitation of the foregoing, the Sellers shall
cooperate with the Buyer in order to cause the local telephone company to
transfer to the Buyer's name and account all telephone numbers and fax numbers
currently held by the Sellers (provided that the Buyer acknowledges that the
transfer of such telephone numbers and fax numbers is in the discretion of the
local telephone companies).
ARTICLE VII
COSTS
7.1 FINDER'S OR BROKER'S FEES. Each of the Buyer, the Sellers and the
Shareholder represent and warrant 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.
7.2 EXPENSES. The Buyer, the Sellers and the Shareholder shall each
pay all costs and expenses incurred or to be incurred by them, respectively, in
negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.
ARTICLE VIII
FORM OF AGREEMENT
8.1 EFFECT OF HEADINGS. The section headings used in this Agreement
and the titles of the schedules hereto are included for purposes of convenience
only, and shall not affect the
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construction or interpretation of any of the provisions hereof or of the
information set forth in such Schedules.
8.2 ENTIRE AGREEMENT; WAIVERS. This Agreement and the other
agreements and instruments referred to herein constitute the entire agreement
between the parties pertaining to the subject matter hereof, and supersede 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, the schedules hereto, and the other
agreements and instruments referred to herein. 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.
8.3 COUNTERPARTS. This Agreement may be executed 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.
ARTICLE IX
DEFINITIONS
9.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Above Ground Storage Tank" shall have the meaning set forth in
SECTION 2.20(F) of EXHIBIT A.
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect
on the date hereof.
"Assumed Liabilities" shall have the meaning set forth in SECTION
1.3.
"Buyer's Shares" shall have the meaning set forth in SECTION
1.11(C).
"Closing Date" shall have the meaning set forth in SECTION 1.10.
"Closing" shall have the meaning set forth in SECTION 1.10.
"Current Balance Sheet" shall have the meaning set forth in SECTION
2.5 of EXHIBIT A.
"Discharge" shall have the meaning set forth in SECTION 2.20(F) of
EXHIBIT A.
"Environmental Assessment" shall have the meaning set forth in
SECTION 4.6.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Excluded Assets" shall have the meaning set forth in SECTION 1.2.
"Finance Contracts" mean the installment sales contracts held by
the Sellers as of the Closing Date and listed on SCHEDULE 1.1(A) hereto
which are secured by vehicles sold by the Sellers. The term "contracts"
shall be deemed to include and the Sellers shall convey to the Buyer in
the purchase and sale of the Purchased Assets hereunder:
(a) any and all monies and payments (including in kind
collections) received or due or to become due with respect to the
contracts and all other rights and benefits thereunder due as of the
Closing Date;
(b) the security interests in the vehicles granted by the retail
consumers ("customers") purchasing vehicles pursuant to the contracts
and any other interest of the Sellers in the vehicles, including,
without limitation, the certificates of title with respect to vehicles,
and in and to all other security, warranties, guaranties and credit
support with respect to the contracts;
(c) any proceeds from claims on and any rights under any
physical damage, credit life and credit accident and health insurance
policies or other insurance (including vendor's single interest
insurance) or certificates relating to the contracts, the vehicles or
the customers;
(d) refunds for the costs of extended service contracts with
respect to vehicles, refunds of unearned premiums with respect to
credit life and credit accident and health insurance policies or other
insurance certificates covering any customer or vehicle or the
customer's obligations with respect to a vehicle and any recourse to
dealers for any of the foregoing;
(e) all documents, records, instruments and files related to
each contract; and
(f) the proceeds of any and all of the foregoing.
"Financial Statements" shall have the meaning set forth in SECTION
2.5(A).
"Fixed Assets" shall have the meaning set forth in SECTION 1.1(D).
"GAAP" means generally accepted accounting principles in effect in
the United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity
or official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Substances" shall have the meaning set forth in SECTION
2.20(F) of EXHIBIT A.
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"Held Back Shares" means the Buyer shall set aside and hold in
accordance with SECTION 5.4 share certificates representing 22,500
shares of the Buyer's Common Stock to be used as security for
indemnification and set-off purposes (see SECTIONS 1.11(C) AND 5.4).
"Held Back Shares" shall have the meaning set forth in SECTION
1.11(C).
"Holder" means the person who is then the record owner of
Registrable Securities which have not been sold to the public.
"Indemnified Party" shall have the meaning set forth in SECTION
1.9(D)(III).
"Indemnifying Party" shall have the meaning set forth in SECTION
1.9(D)(III).
"Inventory" shall have the meaning set forth in SECTION 1.1(C).
"Licenses" shall have the meaning set forth in SECTION 2.20(F) of
EXHIBIT A.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the uniform commercial code or comparable law or any
jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
"Losses" shall have the meaning set forth in SECTION 5.1.
"Material Adverse Change (or Effect)" means a change (or effect),
in the condition (financial or otherwise), properties, assets,
liabilities, rights, obligations, operations, business or prospects
which change (or effect) individually or in the aggregate, is
materially adverse to such condition, properties, assets, liabilities,
rights, obligations, operations, business or prospects.
"Net Price" shall have the meaning set forth in SECTION 1.6.
"Notices" shall have the meaning set forth in SECTION 2.20(B) of
EXHIBIT A.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint share company, estate, trust,
unincorporated association, joint venture, Governmental Authority or
other entity, of whatever nature.
"Proceedings" shall have the meaning set forth in SECTION 2.20(B)
of EXHIBIT A.
"Purchase Price" shall have the meaning set forth in SECTION 1.5.
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"Purchased Assets" shall have the meaning set forth in SECTION 1.1.
"Receivables" shall have the meaning set forth in SECTION 1.1(B).
"Registrable Securities" means (i) shares of Common Stock owned by
a Holder; and (ii) any Common Stock issued in respect of the shares
described in clause (i) upon any stock split, stock dividend,
recapitalization or other similar event.
"Registration Expenses" means all expenses incurred by the Buyer in
compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, transfer taxes, fees
and disbursements of counsel for the Buyer, blue sky fees and expenses,
reasonable fees and disbursements of one counsel for all the selling
Holders and other security holders, and the expense of any special
audits incident to or required by any such registration.
"SEC" means The Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" means all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Tax.
"Taxes" means all taxes, fees or other assessments, including, but
not limited to, income, excise, property, sales, use, franchise,
intangible, payroll, withholding, social security and unemployment
taxes imposed by any federal, state, local or foreign governmental
agency, and any interest or penalties related thereto.
"Underground Storage Tank" shall have the meaning set forth in
SECTION 2.20(F) of EXHIBIT A.
The term "register" means to register under the Securities Act and
applicable state securities laws for the purpose of effecting a public
sale of securities.
9.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
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(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
ARTICLE X
PARTIES
10.1 PARTIES IN INTEREST. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or 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.
10.2 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) on the date of service if served personally on the party to whom
notice is to be given, (b) on the day after the date sent by recognized
overnight courier service, properly addressed and with all charges prepaid or
billed to the account of the sender, or (c) on the third day after mailing if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly addressed as follows:
(i) If to the Sellers and/or the Shareholder:
Roman Fedo
14335 Halter Road
Willington, Florida 33414
(ii) If to the Buyer:
Smart Choice Automotive Group, Inc.
5200 South Washington Avenue
Titusville, Florida 32780
Attn: Neal Hutchinson
or to such other address as any party shall have specified by notice in writing
given to the other party.
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ARTICLE XI
MISCELLANEOUS.
11.1 AMENDMENTS AND MODIFICATIONS. No amendment or modification of this
Agreement or any schedule hereto shall be valid unless made in writing and
signed by the party to be charged therewith.
11.2 NON-ASSIGNABILITY; BINDING EFFECT. 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.
11.3 GOVERNING LAW; JURISDICTION. This Agreement shall be construed and
interpreted and the rights granted herein governed in accordance with the
internal laws of the State of Florida.
ARTICLE XII
SECURITIES LAW MATTERS
12.1 DISPOSITION OF SHARES
(a) The Sellers, the Shareholder and the Buyer acknowledge that the
Shares constitute "restricted securities" as defined in Rule 144 under the
Securities Act. The party to receive the Buyer's Shares hereunder agrees that
prior to Closing they will not dispose of any shares of capital stock of the
Buyer, and following the Closing he will not sell, transfer or otherwise dispose
of any of his Shares except in accordance with applicable law.
(b) The Sellers hereunder agree that they will not sell, transfer
or otherwise dispose of any of the Shares, except pursuant to (a) an exemption
from the registration requirements under the Securities Act, which does not
require the filing by the Buyer with the SEC of any registration statement,
offering circular or other document, in which case, he shall first supply to the
Buyer an opinion of counsel (which counsel and opinions shall be satisfactory to
the Buyer) that such exemption is available, or (b) an effective registration
statement filed by the Buyer with the SEC under the Securities Act.
(c) The Shareholder and the executive officers of the Sellers have
carefully reviewed the 10-KSB for the fiscal year ended September 30, 1996,
10-QS for the period since that time through the Closing Date and the 8-Ks for
the same period of the Buyer and have had an opportunity to ask questions
regarding the same.
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12.2 LEGENDS. The certificates representing the Buyer's Shares shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE ACT, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY
STATE WITH RESPECT THERETO, OR IN ACCORDANCE WITH AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
The Buyer may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
The Buyer agrees, upon receipt of an appropriate opinion of counsel, to remove
such legend from the certificates after the second anniversary of the Closing
Date by prompt delivery of substitute certificates upon the request of the
holder if at such time such legend (or portion thereof) is no longer required
for purposes of, or applicable pursuant to the prior provisions of this ARTICLE
XII.
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement on and as of the date first set forth above.
SMART CHOICE AUTOMOTIVE GROUP, INC.
/S/ J. NEAL HUTCHINSON, JR.
By: J. N. Hutchinson, Jr.
Title: Assistant Vice President
FEDO FINANCE, INC., D/B/A THE FINANCE INN
/S/ ROMAN FEDO
By: Roman Fedo
Title: President
ROMAN FEDO, INC., D/B/A DAVID'S AND FEDO FINANCE, INC.
/S/ ROMAN FEDO
By: Roman Fedo
Title: President
/S/ ROMAN FEDO
By: Roman Fedo, Shareholder
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EXHIBIT A
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS AND THE SHAREHOLDER
2.1 CORPORATE STATUS. The Sellers are corporations duly organized,
validly existing and in good standing under the laws of the State of Florida,
with full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and to own its assets
and conduct its Business as owned and conducted on the date hereof. The Sellers
are not required to be qualified as a foreign corporation under the laws of any
jurisdiction.
2.2 AUTHORIZATION OF AGREEMENT. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Sellers have been duly and validly authorized by the
Boards of Directors of the Sellers and by the Shareholder (as Shareholder of the
Sellers). No further corporate authorization is required on the part of the
Sellers to consummate the transactions contemplated hereby.
2.3 VALID AND BINDING AGREEMENT. This Agreement constitutes the
legal, valid and binding obligation of the Sellers and the Shareholder,
enforceable against the Sellers and the Shareholder 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.
2.4 NO BREACH OF STATUTE OR CONTRACT. Neither the execution and
delivery of this Agreement by the Sellers and the Shareholder, nor compliance
with the terms and provisions of this Agreement on the part of the Sellers and
the Shareholder, will: (a) violate any statute or regulation of any governmental
authority, domestic or foreign, affecting the Sellers; (b) require the issuance
to the Sellers of any authorization, license, consent or approval of any federal
or state governmental agency or any other person; (c) conflict with or result in
a breach of any of the terms, conditions or provisions of the Sellers'
certificates of incorporation or by-laws or any judgment, order, injunction,
decree, agreement or instrument to which the Sellers or either of the
Shareholder are parties, or by which the Sellers or the Shareholder are bound,
or constitute a default thereunder; or (d) require the consent of any third
party under any outstanding statute, regulation, judgment, order, injunction,
decree, agreement or instrument to which the Sellers or the Shareholder are
parties or by which the Sellers or the Shareholder are bound.
2.5 FINANCIAL INFORMATION.
(a) Annexed hereto as SCHEDULE 2.5 are the unaudited combined
financial statements (including balance sheet, income statement and statement of
cash flows) for the Sellers as of December 31, 1994, December 31, 1995 and
December 31, 1996 and for each of the years then ended, and as of May 31, 1997
and for the five (5) months then ended (collectively, the "FINANCIAL
STATEMENTS"), the balance sheets of the Sellers dated as of May 31, 1997,
included in the Financial Statements are referred to herein as the "Current
Balance Sheets," all of which
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fairly reflect, in all material respects, the combined financial condition and
results of operations of the Sellers as of the dates thereof and for the periods
then ended, in accordance with generally accepted accounting principles
consistently applied; and, without limitation of the foregoing, the Sellers do
not have any material liabilities, fixed or contingent, known or unknown, except
to the extent reflected in the most recent of such Financial Statements or
thereafter incurred in the normal course of the Sellers' businesses.
2.6 NO MATERIAL CHANGES. Since the date of the Current Balance
Sheets, (a) the Sellers have been operated solely in the normal course, (b)
there has been no material adverse change in the financial condition or
operations of the Sellers from that reflected in such Financial Statements, (c)
the Sellers have not incurred any material obligation or liability except in the
normal course of business, (d) the Sellers have not effected or suffered any
material modification in its collection practices, or with respect to the timing
and manner of payment of its accounts payable, and (e) there has not been any (i
i) sale, assignment or transfer by the Sellers of any assets or other part of
its business, excluding the sale or disposition of inventory in the ordinary
course of business
2.7 TAX MATTERS. The Sellers have, to the date hereof, timely filed
all tax reports and tax returns required to be filed by the Sellers, and the
Sellers have paid all taxes, assessments and other impositions as and to the
extent required by applicable law. All federal, state and local income,
franchise, sales, use, property, excise, payroll withholding 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 Sellers as of the
date hereof have been fully paid, and all taxes and other assessments and levies
which the Sellers are required by law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
authorities to the extent due and payable. There are no outstanding or pending
claims, deficiencies or assessments for taxes, interest or penalties with
respect to any taxable period of the Sellers and there are no Liens for taxes on
any of the Purchased Assets.
2.8 TITLE AND CONDITION OF THE ASSETS. Except as set forth in
SCHEDULE 2.8 hereto, the Sellers have and own good and marketable title to all
of the Purchased Assets, free and clear of all Liens, pledges, claims, security
interests and encumbrances of every kind and nature (except for any such Liens,
security interests or encumbrances which are being discharged pursuant to
SECTION 1.8 and are shown on SCHEDULE 2.8 hereto). All of the Fixed Assets are
in good operating condition and repair (reasonable wear and tear excepted), are
adequate for their use in the Business as presently conducted and are sufficient
for the continued conduct of such Business.
2.9 RECEIVABLES. All of the Receivables (other than the Finance
Contracts) (whether reflected in the Financial Statements or thereafter created
or acquired by the Sellers prior to the date hereof), (a) have arisen in the
normal course of the Sellers' Business; (b) are not subject to any
counterclaims, set-offs, allowances or discounts of any kind; and (c) have been,
are and will be valid and collectible in the ordinary course of the business;
and (d) neither the Shareholder nor the Sellers have knowledge of any material
or unusual risk of non-payment of any of the Receivables.
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2.10 INVENTORY. All of the Inventory (whether reflected in the
Financial Statements or thereafter acquired by the Sellers prior to the date
hereof) is of a quality, age and quantity consistent with the historical
practices of the Sellers since January 1, 1994, and is valued on the Sellers'
books at the lower of cost or market (on a first in-first out basis).
2.11 LEGAL COMPLIANCE. The Sellers are, and for the past three (3)
years have been, in compliance in all material respects with all laws, statutes,
regulations, rules and ordinances applicable to the conduct of its business
(including, without limitation, all applicable consumer finance and/or lending
and leasing laws, and all applicable environmental laws, statutes, regulations,
rules and ordinances), and has in full force and effect all licenses, permits
and other authorizations required for the conduct of its business as presently
constituted. The Sellers are not in default or violation in respect of or under
any of the foregoing, and neither the Shareholder nor the Sellers are aware of
any past or present condition or circumstance in the Sellers' business
(including, without limitation, with respect to any real property now or
previously occupied by the Sellers) which could give rise to any material
liability under any such law, statute, regulation, rule or ordinance.
2.12 REAL PROPERTY. The Sellers own a leasehold as lessee under the
Lease (a true and complete copy of which is annexed hereto as SCHEDULE 2.12).
The Sellers (and, to the best of the Sellers' and the Shareholder's knowledge,
the landlord thereunder) is presently in compliance with all of its obligations
under the Lease, and the premises leased thereunder are in good condition
(reasonable wear and tear excepted), and are adequate for the operation of the
Business as presently conducted. No consent of the landlord under the Lease
which has not previously been obtained is required in order to effect the
assignment of the Lease to the Buyer pursuant to this Agreement.
2.13 EMPLOYEES. The Sellers are not parties to or bound by any
collective bargaining agreement, employment agreement, consulting agreement or
other commitment for the employment or retention of any person, and no union is
now certified or has claimed the right to be certified as a collective
bargaining agent to represent any employees of the Sellers. Neither the
Shareholder nor the Sellers have had any material labor difficulty in the past
two (2) years, and the Sellers have not received notice of any unfair labor
practice charges against the Sellers or any actual or alleged violation by the
Sellers of any law, regulation, or order affecting the collective bargaining
rights of employees, equal opportunity in employment, or employee health,
safety, welfare, or wages and hours.
2.14 EMPLOYEE BENEFITS. The Sellers do not maintain and are not
required to make any contributions, and have no outstanding obligation to make
any contribution, to any pension, profit-sharing, retirement, deferred
compensation or other such plan or arrangement for the benefit of any employee,
former employee or other person, and the Sellers do not have any obligations
with respect to deferred compensation or future benefits to any past or present
employee. SCHEDULE 2.14 hereto fairly summarizes the employee benefits currently
granted by the Sellers to its employees, provided that nothing herein contained
shall be deemed to obligate the Buyer to assume or continue any such employee
benefit or provide any comparable benefit.
2.15 CONTRACTS AND COMMITMENTS. The Sellers have previously provided
to the Buyer true and complete copies of all of the credit agreements, finance
leases and other
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agreements underlying the Receivables. Other than (a) such credit agreements,
finance leases and other agreements underlying the Receivables, (b) the Lease,
and (c) those contracts and commitments described in SCHEDULE 2.15 hereto, there
is no contract, agreement, commitment or understanding which is material to the
ongoing operation of the Business.
2.16 LITIGATION. There is no pending or, to the best knowledge of
the Sellers and the Shareholder, threatened litigation, arbitration,
administrative proceeding or other legal action or proceeding against the
Sellers or relating to its business.
2.17 INTELLECTUAL PROPERTY. The Sellers have the valid right to
utilize all trade names and other intellectual property utilized in its
Business, and have not received notice of any claimed infringement of any of
such intellectual property with the rights or property of any other person.
2.18 GOING CONCERN. Neither the Sellers nor the Shareholder have any
knowledge of any fact, event, circumstance or condition (including but not
limited to any announced or anticipated changes in the policies of any material
supplier, referral source, client or customer) that would materially impair the
ability of the Buyer to continue the Business heretofore conducted by the
Sellers in substantially the manner heretofore conducted by the Sellers (other
than general, industry-wide conditions).
2.19 TITLE AND CONDITION OF FINANCE CONTRACTS. Except as set forth on
SCHEDULE 2.19 hereto:
(a) the Sellers have fully complied with all laws, rules and
regulations of any Governmental Authority applicable to the transaction creating
each Finance Contract, including the Federal Truth in Lending Act, the Federal
Equal Credit Opportunity Act, the Federal Consumer Credit Protection Act, and
comparable laws of the State of Florida;
(b) the Sellers have all required licenses, permits and authority
to sell used vehicles, finance the sale of used vehicles and execute and perform
the Finance Contracts, and the Sellers have all required licenses, permits and
authority to acquire, hold, and collect and assign the Finance Contracts to the
Buyer;
(c) the Sellers have received the down payment amount stated in
each Finance Contract in cash or its equivalent and no part of the down payment
on any Finance Contract has been loaned directly or indirectly to the customer
by any Seller, or any affiliate of any Seller, other than "pick-up" payments
disclosed in the Finance Contracts;
(d) all vehicles and any other goods and services sold by the
Sellers pursuant to each Finance Contract are free of all Liens and claims of
any kind other than those in favor of Sellers, and the description of the
vehicle in each Finance Contract is true, complete and accurate.
(e) the vehicle sold to the customer named in each Finance Contract
has been delivered to the customer named in the Finance Contract and application
to the appropriate agency of the State of Florida has been filed in accordance
with applicable law for registration of the vehicle showing the customer as the
owner and one of the Sellers as the only lien holder;
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(f) the customer named in each Finance Contract has full legal
capacity to make the Finance Contract, and the name of the customer stated in
the Finance Contract is the true and actual name of the customer and such
customer named in the Finance Contracts has executed the Finance Contract;
(g) no customer on any Finance Contract being sold to the Buyer has
put the Sellers or any Affiliate of Sellers on notice of or asserted any claim,
offset, defense, claim or defense relating to the vehicle sold by the Sellers or
the Finance Contract, the performance or non-performance by Sellers or any
Affiliate of Sellers' obligations under any Finance Contract, warranty or
guarantee, or arising from any act, error, omission, representation or warranty
of the Sellers or any of their officers, agents or employees. The Sellers have
fully and in good faith performed and discharged all of their obligations to the
customer arising under each Finance Contract or relating to the Finance Contract
accrued as of the date of the assignment of the Finance Contract to the Buyer;
(h) if required by applicable law at the time of the origination of
each Finance Contract, the vehicle securing the Finance Contract was insured for
liability of the customer in accordance with applicable law at the time of the
origination of the Finance Contract;
(i) all sales taxes assessed in connection with the sale of the
vehicle to the customer have been paid in full, or if not paid in full, will be
paid in full when due by Sellers;
(j) each Finance Contract has created a valid and enforceable first
priority perfected security interest in favor of Sellers in the vehicle, which
security interest is accurately reflected on the vehicle's certificate of title
and will be or has been validly assigned and transferred by Sellers to Buyer on
the Closing Date;
(k) each Finance Contract is in the form attached hereto as part of
SCHEDULE 2.19 and does not include any amendments, modifications or supplements
other than in the form attached hereto except as modified by subsequent repairs;
(l) each Finance Contract provides for level payments not less
frequently than monthly, in amounts that fully amortize the amount financed
stated therein over the original term (except for the last payment, which may be
less than the level payment) and yield interest at the annual percentage rate
stated in the Finance Contract;
(m) each Finance Contract accurately reflects the actual terms and
conditions of the customer's purchase of the vehicle and the financing thereof
and there are no terms or conditions not expressly stated in the Finance
Contract;
(n) no vehicle shall have been repossessed or designated for
repossession and no investigation has been initiated by Sellers to determine the
whereabouts of a vehicle or customer for the purposes of the repossession of the
vehicle;
(o) The Sellers are the sole owners of each Finance Contract, and
each Finance Contract is free of all Liens;
(p) except for the conveyances hereunder, the Sellers have not
sold, pledged, assigned or transferred to any other person, or grant, create,
incur, assume or suffer to exist any
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Lien on any Finance Contract, or vehicle securing the Finance Contract, whether
now existing or hereafter created, or any interest therein. No customer on a
Finance Contract has any defense, set off, or counterclaim to the payment of
the amount of the obligation thereon;
(q) the prepared and applicable ledger cards and/or computer
records applicable to each Finance Contract delivered to the Buyer by the
Sellers fully and accurately reflects the true outstanding unpaid balance of
such Finance Contract and the Finance Contract's records accurately reflect all
receipts on such Finance Contract from the obligors thereof and all credits to
which such obligors are entitled;
(r) all the Finance Contracts were originated in the State of
Florida and the Sellers have paid or caused to be paid any and all license,
franchise, intangible, stamp or other taxes or fees due and owing to the State
of Florida, or any political subdivision thereof, arising from or growing out of
the acquisition, collection or holding of such Finance Contract; and
(s) The Sellers will pay over to the Buyer in-kind any payments
received on each Finance Contract from and after the Closing Date.
2.20 ENVIRONMENTAL MATTERS.
(a) The Sellers are and have at all times been in material
compliance with all Environmental Laws governing its business, operations,
properties and assets, including, without limitation: (i) all material
requirements relating to the Discharge and Handling of Hazardous Substances;
(ii) all material requirements relating to notice, record keeping and reporting;
(iii) all material requirements relating to obtaining and maintaining Licenses
for the ownership by the Sellers of its properties and assets and the operation
of its business as presently conducted; or (iv) all applicable writs, orders,
judgments, injunctions, governmental communications, decrees, informational
requests or demands issued pursuant to, or arising under, any Environmental
Laws.
(b) There are no (and to the knowledge of the Shareholder there is
no basis for any) non-compliance orders, warning letters, notices of violation
(collectively "NOTICES"), claims, suits, actions, judgments, penalties, fines,
or administrative or judicial investigations of any nature or proceedings
(collectively, "PROCEEDINGS") pending or to the knowledge of the Shareholder
threatened against or involving the Sellers, its businesses, operations,
properties or assets, issued by any Governmental Authority or third party with
respect to any Environmental Laws or Licenses issued to the Sellers thereunder
in connection with, related to or arising out of the ownership by the Sellers of
its properties or assets or the operation of its businesses, which have not been
resolved to the satisfaction of the issuing Governmental Authority or third
party in a manner that would not impose any material obligation, burden or
continuing liability on the Buyer or the Sellers in the event that the
transactions contemplated by this Agreement are consummated.
(c) The Sellers have not at any time Handled or Discharged, nor has
it at any time allowed or arranged for any third party to Handle or Discharge,
Hazardous Substances to, at or upon: (i) any location other than a site lawfully
permitted to receive such Hazardous Substances; (ii) any parcel of real property
owned or leased at any time by the Sellers, except in material compliance with
applicable Environmental Laws; or (iii) any site which, pursuant to CERCLA or
any similar state law (x) has been placed on the National Priorities List or its
state
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equivalent, or (y) the Environmental Protection Agency or any relevant
state agency has notified the Sellers that it has proposed or is proposing to
place on the National Priorities List or its state equivalent. There has not
occurred, nor is there presently occurring, a Discharge, or threatened Discharge
of any Hazardous Substance on, into or beneath the surface of, or adjacent to,
any real property owned or leased at any time by the Sellers.
(d) Except as set forth on SCHEDULE 2.20(d) hereto, the Sellers do
not use, nor have they used, any Aboveground Storage Tanks or Underground
Storage Tanks; there are not now nor have there ever been any Underground
Storage Tanks on any real property owned or leased at any time by the Sellers;
and there has been no Discharge from or rupture of any Aboveground Storage Tanks
or Underground Storage Tanks.
(e) Except as set forth on SCHEDULE 2.20(e) hereto, there have been
no (i) environmental audits, assessments or occupational health studies
undertaken by the Sellers or its agents or representatives thereof or, to the
knowledge of the Sellers, undertaken by any Governmental Authority, or any third
party, relating to or affecting the Sellers or any real property owned or leased
at any time by the Sellers; (ii) ground, water, soil, air or asbestos monitoring
undertaken by the Sellers or its agents or representatives thereof or undertaken
by any Governmental Authority or any third party, relating to or affecting the
Sellers or any real property owned or leased at any time by the Sellers; (iii)
material written communications between the Sellers and any Governmental
Authority arising under or related to Environmental Laws including but not
limited to, any notices of violation and notices of non-compliance; and (iv)
outstanding citations issued under OSHA, or similar state or local statutes,
laws, ordinances, codes, rules, regulations, orders, rulings or decrees,
relating to or affecting the Sellers or any real property owned or leased at any
time by the Sellers.
(f) For purposes of this Section, the following terms shall have
the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to such
term in Section 6901 ET seq., as amended, of RCRA, or any applicable
state or local statute, law, ordinance, code, rule, regulation, order
ruling, or decree governing Aboveground Storage Tanks.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing, migrating or emitting, as any of such terms may
further be defined in any Environmental Law, into or through any medium
including, without limitation, ground water, surface water, land, soil
or air.
"Handle" means any manner of generating, accumulating, storing,
treating, disposing of, transporting, transferring, labeling, handling,
manufacturing or using, as any of such terms may further be defined in
any Environmental Law.
"Hazardous Substances" shall be construed broadly to include any
toxic or hazardous substance, material or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence
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of which requires investigation or remediation under any
Environmental laws or which are or become regulated, listed or
controlled by, under or pursuant to any Environmental Laws, or which
has been or shall be determined or interpreted at any time by any
Governmental Authority to be a hazardous or toxic substance regulated
under any other statute, law, regulation, order, code, rule, order, or
decree.
"Licenses" means all licenses, certificates, permits, approvals,
decrees and registrations.
"Underground Storage Tank" shall have the meaning ascribed to such
term in Section 6901 ET SEQ., as amended, of RCRA, or any applicable
state or local statute, law, ordinance, code, rule, regulation, order,
ruling or decree governing Underground Storage Tanks.
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EXHIBIT B
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Buyer 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 and to consummate the transactions contemplated hereby.
3.2 AUTHORIZATION OF AGREEMENT. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Buyer has been duly and validly authorized by the
Board of Directors of the Buyer. No further corporate authorization is required
on the part of the Buyer to consummate the transactions contemplated hereby.
3.3 VALID AND BINDING AGREEMENT. This Agreement constitutes the
legal, valid and binding obligation of the Buyer, enforceable against the Buyer
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.
3.4 NO BREACH OF STATUTE OR CONTRACT. Neither the execution and
delivery of this Agreement by the Buyer, nor compliance with the terms and
provisions of this Agreement on the part of the Buyer, will: (a) violate any
statute or regulation of any governmental authority, domestic or foreign,
affecting the Buyer; (b) require the issuance of any authorization, license,
consent or approval of any federal or state governmental agency; (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 the Buyer is a party, or by which the Buyer is
bound, or constitute a default thereunder; or (d) require the consent of any
third party under any outstanding statute, regulation, judgment, order,
injunction, decree, agreement or instrument to which the Buyer is a party, or by
which the Buyer is bound.
3.5 ACCESS TO BOOKS AND RECORDS. The Buyer has permitted the Sellers
to have access to such of the books and records of the Buyer as the Sellers have
requested in connection with the transactions contemplated by this Agreement.
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SCHEDULE 2.12
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made this 30th day of June, 1997,
by and between ROMAN FEDO (the "Lessor"), whose address is 14335 Halter Road,
Wellington, Florida 33414, and FIRST CHOICE AUTO FINANCE, INC., a Florida
corporation (the "Lessee"), whose address is 5200 South Washington Avenue,
Titusville, Florida 32780.
W I T N E S S E T H:
That the Lessor, for and in consideration of the covenants and
agreements hereinafter set forth and the rent hereinafter specifically reserved,
does hereby Lease unto the Lessee the "Premises" identified herein in accordance
with the following terms and conditions:
PREMISES
1.01 Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor the following property (collectively, the "Premises"):
(a) Certain real property lying and being in Palm Beach
County, Florida, located at 4065 South Military Trail, Lake Worth, Florida
33463; and
(b) All buildings, structures and improvements (collectively,
the "Buildings") now or hereafter erected on such land either prior to the
commencement of or during the term of this Lease and all fixtures, alarm
systems, light fixtures, ceiling fans, air-conditioning, heating, plumbing,
electrical and other utility systems, equipment and other property located
therein both prior to the commencement of and during the term of this Lease (all
of the foregoing including the Buildings are collectively, the "Improvements").
TERM
2.01 The primary term of this Lease shall be for a period of five (5)
year(s) commencing on June 30, 1997, and terminating on June 30, 2002 at 11:59
p.m., unless sooner terminated pursuant to the provisions of this Lease (the
"Primary Term").
2.02 Upon the expiration of the Primary Term of this Lease, and
provided Lessee is not then in default hereunder, Lessee shall have the option
to extend this Lease for three (3) consecutive additional periods of five (5)
years (the "Option Terms"). In order to exercise any of these options, Lessee
must give Lessor notice in writing of its intent to exercise the option to
extend at least sixty (60) days prior to the expiration of the Primary Term, or
the first or second Option Term, as the case may be. The rights of Lessor and
Lessee during the Option Terms, if any, shall be governed by the terms and
conditions of the Lease.
<PAGE>
2.03 For purposes of this Lease the Primary Term and the Option Terms
are sometimes hereinafter collectively referred to as the "Term".
RENT
3.01 The annual rent for the use and occupancy of the Premises during
the Primary Term and Option Term(s), if any, shall be Eighty-Six Thousand Four
Hundred and No/100 Dollars ($86,400.00), which shall be paid by Lessee to Lessor
in equal monthly installments of Seven Thousand Two Hundred and No/100 Dollars
($7,200.00). The total rent for the Primary Term and each Option Term is Four
Hundred Thirty-Two Thousand and No/100 Dollars ($432,000.00), except as may be
modified by Section 3.02 hereof. Notwithstanding anything contained herein to
the contrary, no payment of rent shall be due and payable to Lessor until the
Rental Commencement Date (as hereinafter defined).
3.02 (a) In view of the fluctuating purchasing power of the dollar, the
parties hereto, desiring to adjust the above described fixed rent to such
purchasing power, agree that adjustments shall be made in the fixed rent from
time to time as hereinafter provided, so as to reflect as early as possible such
fluctuations. The parties hereto adopt as the standard for measuring such
fluctuations the United States Bureau of Labor Statistics Consumer Price Index
for Urban Wage Earners and Clerical Workers (Revised Series), All Items, U.S.
City Average (the "Index"). The Index for a specific date (as required by this
Lease) shall be deemed to mean the Index published on that date or, if not
published on that date, the most recent publication of the Index prior to such
date. If the publication of the Index shall be discontinued, "Index" shall be
such other source selected by Lessor, in its sole and reasonable judgment, as is
most nearly comparable to the Index as defined above. The first adjustment shall
be made at the end of the Primary Term, and shall become effective on the first
(1st) day of the first Lease Year of the first Option Term, and a like
adjustment shall be made at the end of each subsequent Lease Year of the each of
the Option Term(s).
(b) Commencing at the end of the Primary Term of this Lease,
the annual rent for the first Lease Year of the first Option Term and each
subsequent Lease Year of the Option Term(s), if any, shall be adjusted annually
as follows:
(i)The annual rent for the immediately preceding Lease
Year of the Term of this Lease shall be multiplied by a fraction, the numerator
of which shall be the Index for the month which is three (3) months prior to the
first month of the next ensuing Lease Year and the denominator of which shall be
the Index for the month which is two (2) months prior to the commencement of the
immediately preceding Lease Year.
(ii) The figure resulting from the calculations set forth
above shall be the new annual rent amount for the next ensuing Lease Year.
Provided, however, notwithstanding anything to the contrary contained in this
paragraph 3.02, in no event shall the annual rent due and payable hereunder be
either: (A) LESS for any successive Lease Year than One Hundred percent (100%)
of the annual rent paid during the immediately preceding Lease Year regardless
of the value of the dollar as reflected by said Index; or (B) MORE for any
successive Lease Year than One
<PAGE>
Hundred and Three percent (103%) of the annual rent paid during the immediately
preceding Lease Year regardless of the value of the dollar as reflected by
said Index.
3.03 The annual rent due during any Lease Year of the Term of this
Lease, shall be paid by Lessee to Lessor in equal monthly installments, together
with any applicable sales tax due thereon. Such monthly payment shall be due and
payable in advance, beginning on the Rental Commencement Date, and continuing on
the first (1st) day of each month thereafter during the Term.
3.04 If the Rental Commencement Date (as hereinafter defined) is a day
other than the first day of a calendar month, then Lessee shall pay on the
Rental Commencement Date a prorata portion of the fixed monthly rent described
in the foregoing paragraphs, prorated on a per diem basis with respect to the
fractional calendar month at the beginning of the Lease Year.
3.05 The following words shall have the following definitions
throughout this Lease. The term "Lease Year" shall mean for the first Lease
Year, that period commencing with the Rental Commencement Date and ending on the
last day of the 12th full calendar month following the Rental Commencement Date;
and for each succeeding Lease Year, that period commencing with the first day of
the calendar month after termination of the preceding Lease Year, and ending on
the last day of the 12th month thereafter. The term "Calendar Year" shall mean
for the first Calendar Year, the period commencing with the Rental Commencement
Date and ending December 31st of the year in which the Primary Term of this
Lease commenced; and for each succeeding Calendar Year, that period commencing
on January 1st and ending December 31st of that year; and for the last Calendar
Year, that period commencing January 1st of the last year of the Term of this
Lease, and ending on the termination date of such Term. The term "Rental
Commencement Date" shall mean June 30, 1997.
3.06 The total monthly payment due hereunder, which includes the rent,
shall be paid by Lessee to Lessor without notice or demand, and without
abatement, reduction, setoff, counterclaim, defense or deduction, except as
specifically provided herein, and shall be paid to Lessor in lawful money of the
United States.
3.07 Lessee will promptly pay all rent and other charges and render all
statements herein prescribed at the office of Lessor at 14335 Halter Road,
Wellington, Florida 33414, or to such other person or corporation and at such
other physical street address, as shall be designated by Lessor in writing at
least ten (10) days prior to the next ensuing rent payment date.
<PAGE>
ADDITIONAL RENT
4.01 All taxes, including real estate taxes, insurance premiums,
charges, costs, and expenses that Lessee assumes or agrees to pay hereunder,
together with any applicable Florida State sales and/or use tax, and together
with all interest and penalties that may accrue thereon in the event of the
failure of Lessee to pay those items, and all other damages, costs, expenses,
and sums that the Lessor may suffer or incur, or that may become due, by reason
of any default of Lessee or failure by Lessee to comply with the terms and
conditions of this Lease, shall be deemed to be "additional rent" and shall be
due and payable immediately and, in the event of non-payment, Lessor shall have
all the rights and remedies as herein provided for failure to pay rent.
LATE CHARGE
5.01 Lessee agrees to pay Lessor a late charge of five percent (5%) of
each payment of rent required to be paid by Lessee hereunder not received by
Lessor within fifteen (15) days of the due date thereof. It is agreed by the
parties hereto that said late charge shall be for reimbursement to Lessor for
collection charges incurred as a result of the overdue rent and/or additional
rent. In the event that any check, bank draft, order for payment or negotiable
instrument given to Lessor for any payment under this Lease shall be dishonored
for any reason whatsoever not attributable to Lessor, Lessor shall be entitled
to make an administrative charge to Lessee of Fifty Dollars ($50.00).
PROPERTY TAXES
6.01 Lessee shall be responsible to pay any and all real estate taxes
due with respect to the Premises during the term of this Lease based on the
highest available discount (i.e. payment amount in November). For fractions of a
calendar month at the beginning or end of a month during the term of the Lease,
the Lessee's liability for real estate taxes on the Premises shall be prorated
based on the actual number of days in that particular month. Contemporaneously
with the payment of such real estate taxes, Lessee shall pay Lessor any
applicable Florida State sales or use tax that may be due on the payment of such
real estate taxes by Lessee.
6.02 The parties hereto understand and agree that Lessee shall pay the
real estate taxes as set forth herein and shall deliver official receipts
evidencing such payment unto Lessor, at the place at which rent is required to
be made, which payment of the real estate taxes shall be made and said receipts
delivered on or before the date the real estate tax itself would become
delinquent in accordance with the law then governing the payment of such real
estate taxes. The parties hereto agree that for the Calendar Year 1997, Lessee
shall only be responsible to pay the real estate taxes due on the Premises for
the period commencing with the Rental Commencement Date and ending December 31,
1997. Accordingly, for Calendar Year 1997, Lessor hereby agrees to refund to
Lessee the real estate taxes due on the Premises for that portion of Calendar
Year 1997 prior to the Rental Commencement Date (i.e. January 1, 1997, to the
Rental Commencement Date), within thirty (30) days of Lessor's receipt of the
receipt evidencing the payment of such real estate taxes by Lessee. The portion
of the real estate taxes for Calendar Year 1997 which are Lessor's
<PAGE>
responsibility as set forth above shall be calculated based on the highest
available discount (i.e. payment amount in November).
PUBLIC UTILITIES - UTILITY CHARGES
7.01 Lessee shall pay all charges for gas, water, sewer, waste removal,
electricity, telephone, alarm and other utility services used in the Premises
during the term of this Lease. If any such charges are not paid when due, Lessor
may pay the same, and any amounts so paid by Lessor shall thereupon become due
to Lessor from Lessee as additional rents as provided for in Section 4.01
hereof..
USE AND RESTRICTION
8.01 Lessee shall use the Premises for an automobile dealership. Lessee
will neither use or permit any use of the Premises to be in conflict with any
federal, state or local laws, or with any order or regulation of any
governmental unit with jurisdiction over the Premises. In connection with
Lessee's use of the Premises, it, its invitees, licensees, guests and employees
shall, at all times, comply with all laws, ordinances and codes of any nature
whatsoever which govern its use of the Premises.
WASTE, DAMAGE AND REPAIR
9.01 The Lessee shall not cause or permit any waste, damage or injury
to the Premises. Subject to the provisions stated below, Lessee shall keep and
maintain the Premises, the Improvements and every part thereof, including, but
not limited to, all plumbing, electrical and lighting facilities, sprinklers,
HVAC system and air conditioning units in good order and in a neat and clean
condition, and shall repair and replace the same, if necessary, at its sole
expense. All repairs, replacements and renewals by the Lessee shall be of an
equal or better quality of materials and workmanship to that originally existing
in the Improvements. If Lessee fails to perform its obligations under this
paragraph, Lessor may at its option enter upon the Premises and put the same in
good order, condition and repair and the cost thereof shall become due and
payable as additional rent by Lessee to Lessor upon demand as provided for in
Section 4.01 hereof.
<PAGE>
ALTERATIONS
10.01 Lessee shall not make any alterations, additions, or improvements
to the Premises or any part thereof, without the prior written consent of
Lessor, which consent shall not be unreasonably withheld or delayed. All
alterations, additions or improvements to the Premises made by Lessee during the
term of this Lease shall be in keeping with the quality and type of the
Improvements presently located on the Premises. Any alterations, additions or
improvements shall be done in good and workmanlike manner, and in compliance
with all applicable building and zoning laws and with all laws, ordinances,
orders and requirements of all sovereign authorities and the appropriate
departments, commissions, boards and officers thereof. The costs of any such
alterations, additions or improvements to the Premises shall be paid in cash or
its equivalent so that the Lessor's fee simple title to the Premises shall at
all times be free of liens for labor and materials supplied or claimed to have
been supplied.
CONSTRUCTION LIENS
11.01 The Lessor's interest in the Premises shall not be subject to
construction liens arising from Lessee's work or alterations and any repairs
made by Lessee to the Premises. Lessee will not knowingly permit or suffer any
lien attributable to Lessee or its agents or employees to attach to the Premises
and nothing contained herein shall be deemed to imply any agreement of Lessor to
subject Lessor's interest or estate to any construction lien or any other lien.
If any construction lien is filed against the Premises as a result of
alterations, installations, improvements or repairs made or claimed to have been
made by Lessee or anyone holding any part of the Premises through or under
Lessee, Lessee shall discharge the same within forty-five (45) days from the
filing thereof. If Lessee fails to so discharge by payment, bond or court order
any such construction lien, Lessor, at its option, in addition to all other
rights or remedies herein provided, may pay or bond said lien or claim for the
account of Lessee without inquiring into the validity thereof, and all sums so
advanced by Lessor shall be paid by Lessee to Lessor as additional rent on
demand. Pursuant to FLORIDA STATUTES, Section 713.10, notice is hereby given
that Lessor shall not be liable for any labor or materials furnished or to be
furnished to Lessee, and that no construction or other lien for any such labor
or materials shall attach to or affect the reversionary or other estate or
interest of Lessor in and to the Premises. Lessee agrees, if requested by
Lessor, to join with Lessor in execution of a short form lease or memorandum of
lease to be recorded in the Public Records of Orange County, Florida, for the
purposes of giving notice of this provision of this Lease.
<PAGE>
INSURANCE
12.01 Lessee shall at all times during the term of this Lease maintain
an "All Risk," fire and extended coverage insurance policy on the Premises and
Improvements located thereon in an amount not less than one hundred percent
(100%) of the full replacement value thereof, which amount shall be sufficient
to prevent Lessee from being or becoming a co-insurer on any part of the risk.
The term "replacement value" shall mean the actual cost of restoration of the
Premises and the Improvements located thereon to as nearly the condition
existing immediately prior to the damage or destruction. The "All Risk," fire
and extended coverage insurance policy shall name the Lessor as an additional
insured and shall provide that the policy may not be canceled or modified by the
carrier without ten (10) days prior written notice to the Lessor. The "All-Risk"
coverage shall include endorsements for coverage for wind and hurricane damage
as required by the local municipality.
12.02 Throughout the term of this Lease, Lessee, at its sole cost and
expense, shall obtain and maintain in full force and effect a comprehensive
general public liability insurance policy with respect to the Premises, which
insurance, shall be written with a carrier reasonably acceptable to the Lessor
and with coverage limits of not less than One Million ($1,000,000.00) Dollars in
respect of bodily injury or death to any one person and One Million
($1,000,000.00) Dollars in respect to any one accident or occurrence. The
insurance policy shall name the Lessor as an additional insured and shall
provide that the policy may not be canceled or modified by the carrier without
ten (10) days prior written notice to the Lessor.
12.03 If Lessee shall fail to procure and maintain the insurance
required hereunder, the Lessor may, at its option, pay the same, and the amount
or amounts of money so paid shall be repaid by the Lessee to the Lessor, as
additional rent by Lessee to Lessor upon demand as provided for in Section 4.01
hereof; but the election of Lessor to pay such premiums on behalf of the Lessee
shall not waive the default thus committed by Lessee.
12.04 Lessee will not do or permit anything to be done on the Premises
or in the Improvements, or bring or keep anything therein which shall in any way
increase the rate of fire or other insurance in said Premises, the Improvements,
or on the property kept therein, or conflict with the fire laws or regulations,
or with any insurance policy upon said Premises, the Improvements or any part
thereof, or with any statutes, rules or regulations enacted or established by
the appropriate governmental authority.
12.05 Lessor and Lessee each hereby waives any and all right of
recovery against the other party or against the officers, employees, agents,
representatives, customers and business visitors of such other party, for any
loss or damage to such waiving party, its property or property of others under
its control, arising from any cause covered by any insurance required to be
carried by the parties hereto pursuant to the terms of this Lease or any other
policy of insurance
<PAGE>
carried by such waiving party in lieu thereof, with respect to the Premises
and/or the Improvements.
CASUALTY DAMAGE
13.01 In the event the Premises shall be destroyed or damaged by fire
or other casualty during the term of this Lease, regardless of the extent of the
destruction or damage, this Lease shall not be terminated, except as set forth
below, and Lessee shall rebuild and repair the Premises to substantially conform
to the Premises as were in existence prior to the damage or destruction and
shall have access to all insurance proceeds for such rebuilding. Lessee shall
commence the repair of such damage or destruction within forty-five (45) days
from the date of such damage and shall diligently pursue the repairs to
completion.
13.02 If the Premises shall be partially damaged or destroyed by fire
or other casualty, then during the period that Lessee is deprived of the use of
the damaged portion of the Premises, Lessee shall be required to pay rent
covering only that part of the Premises that it is able to occupy.
13.03 If the Premises are totally damaged or rendered wholly
untenantable for the carrying on of Lessee's business, as a result of a fire or
other casualty, the rent and any other sums which Lessee is obligated to pay
hereunder shall abate as of the date of the occurrence of such fire or other
casualty, until the Premises have been rebuilt. Rent and other charges due by
Lessee hereunder shall again commence in full if and when the Premises shall
have been fully and completely rebuilt.
13.04 In the event of fire or other casualty, all insurance proceeds
payable on account of such casualty shall be allocated in the following manner.
Lessee shall use such proceeds, first, to restore the existing building on the
Premises, or any building erected by Lessee in lieu thereof, to at least as good
a condition as the condition of the presently existing building on the date of
commencement of the term of this Lease and to restore and/or replace any and all
improvements, fixtures, furniture and equipment located on the Premises. The
balance of the proceeds, if any, shall be remitted to Lessor. Insurance proceeds
shall be subject to reasonable control by Lessor to insure the funds are
allocated in the manner hereinabove provided. This Lease, as renewed, if that be
the case, shall not terminate prior to its natural expiration date on account of
any such fire or other casualty.
CONDEMNATION
14.01 The parties hereto agree that if the Premises, or any such
portion thereof as will make the Premises unusable for the purpose herein
leased, are taken or condemned by competent authority for public or quasi-public
use, then this Lease shall terminate from the date of taking, and except as may
otherwise be provided herein, the obligations of the parties hereto shall cease
and terminate. If the Lease continues after a partial taking, the rent shall
abate proportionately as to the part taken. All compensation awarded for such
taking of the Premises and the
<PAGE>
Improvements located thereon shall belong to and be the property of Lessor.
Nothing in this paragraph shall be construed to preclude Lessee from prosecuting
any claim directly against a condemning authority for any damages recoverable by
Lessee in Lessee's own right.
EVENT OF DEFAULT AND REMEDIES
15.01 Each of the following events shall constitute an event of default
or breach ("Event of Default") of this Lease by Lessee:
(a) If Lessee shall file a petition in bankruptcy or insolvency
or for reorganization under any bankruptcy act, or shall voluntarily take
advantage of any such act by answer or otherwise, or shall make an assignment
for the benefit of creditors; or
(b) If involuntary proceedings under any bankruptcy law or
insolvency act shall be instituted against Lessee, or if a receiver or trustee
shall be appointed for all or substantially all of the property of Lessee, and
such proceedings shall not be dismissed or the receivership or trusteeship
vacated within thirty (30) days after the institution or appointment; or
(c) If Lessee shall fail to pay Lessor any rent, additional rent
or other sums due hereunder when said amount shall become due and shall not make
the payment within fifteen (15) days after receipt of written notice from Lessor
indicating that said rent and/or additional rent is due; or
(d) If Lessee shall fail to perform or comply with any of the
conditions of this Lease other than the nonpayment of rent or any other monetary
obligation and if the nonperformance shall continue for a period of thirty (30)
days after written notice thereof by Lessor to Lessee, or, if the performance
cannot be reasonably had within the thirty (30) day period, Lessee shall not in
good faith have commenced performance within the thirty (30) day period and
shall not diligently proceed to completion of performance; or
(e) If Lessee shall vacate or abandon the Premises. Lessee shall
be deemed to have abandoned the Premises if rent and/or any other monetary
obligation due under this Lease is not currently paid and Lessee is absent from
the Premises for a period of thirty (30) days; or
(f) If this Lease or the estate of Lessee hereunder shall be
transferred to or shall pass to or devolve on any other person or party, except
in the manner herein permitted.
15.02 If an Event of Default shall occur, Lessor may, at its option, in
addition to such other remedies as may be available under Florida law:
(a) Terminate this Lease and re-enter and take possession of the
Premises;
(b) Recover possession of the Premises (with or without
terminating this Lease, at Lessor's option) and remove all persons and property
from the Premises, and such
<PAGE>
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Lessee, in the manner permitted by law;
(c) Bring suit for the breach which has occurred without
affecting the obligations of the parties to perform the balance of the Lease;
and
(d) Relet the Premises as Lessor may see fit without thereby
avoiding or terminating this Lease, and for the purpose of such reletting,
Lessor is authorized to make such repairs to the Premises as may be necessary in
the sole discretion of Lessor, and if a sufficient sum is not realized from such
reletting (after payment of all costs and expenses of such repairs and the
expense of such reletting and the collection of rent accruing therefrom) each
month to equal the minimum rent due hereunder then Lessee shall pay such
deficiency each month upon demand therefor. Lessor shall be entitled to retain
all amounts received in excess of the rent reserved hereunder.
(e) If Lessor so desires by acceleration, all current and future
rent and other monetary obligations due hereunder shall become immediately due
and payable, subject to Lessor's obligations under Section 15.03. If Lessor
exercises its right to accelerate, Lessor waives its right to the benefit of any
increases in rent due to any future increases in CPI as of the date of
acceleration.
15.03 Lessor shall have the obligation to mitigate damages; provided,
however, that the Lessor shall be entitled to consider such matters as the
solvency, assets and the credit-worthiness of the proposed new tenant, the
nature of the business of the proposed new tenant and its impact upon the
Premises, the provisions for rental increases over the term and the length of
the term of any proposed lease, the amount of broker's commissions, required
build-out, rent holidays and any additional matters pertinent to the Lessor's
decision to relet the Premises, in determining who, whether, and upon what terms
Lessor will relet the Premises, and the reasonable business judgment of Lessor
in that regard shall not be disturbed.
15.04 No right or remedy hereunder shall be exclusive of any other
right or remedy, but shall be cumulative and in addition to any other right or
remedy hereunder or now or hereafter existing. Failure to insist upon the strict
performance of any provision hereof or to exercise any option, right, power or
remedy contained herein shall not constitute a waiver or relinquishment thereof
for the future.
<PAGE>
16.01 [THIS SECTION INTENTIONALLY DELETED]
TITLE TO LEASEHOLD IMPROVEMENTS
17.01 Until the last day of the term of this Lease, title to any
building(s) or other Improvements constructed on the Premises by Lessee, and the
equipment and other items installed in the existing building and/or in any other
building(s) or Improvements erected by Lessee, or contained therein, and any
changes, alterations, replacements, and/or additions to any of the foregoing,
shall remain solely in Lessee; and Lessee alone shall be entitled to deduct all
depreciation on Lessee's income tax returns on account of any of the foregoing.
On termination of this Lease, Lessee shall have the right to remove all
furniture, furnishings, fixtures, equipment, machinery, and other personalty
whatsoever brought upon and/or installed in the Premises and/or the building(s)
and Improvements thereon by Lessee, provided that any damage caused by the
removal of any permanently installed items shall be repaired by Lessee.
WARRANTIES OF LESSOR
18.01 Lessor warrants and represents to Lessee that:
(a) Neither the execution and delivery of this Lease nor its
performance by Lessor as contemplated hereby will conflict with or result in a
breach of, or constitute a default under, any contract, law, rule, regulation,
mortgage, deed of trust, lease, loan, letter of credit, or any other agreement,
instrument or court order to which Lessor is a party, or by which Lessor may be
bound or effected;
(b) Lessor has good and marketable title to the Premises and no
party, entity or individual, other than Lessor is in possession of any portion
of the Premises;
(c) Lessor has no knowledge of any latent defects or adverse
facts that exist with respect to the physical condition of the Premises which
have not been specifically disclosed in writing to Lessee, including, without
limitation, adverse soil conditions;
(d) All utilities, including, but not limited to, water,
electricity, telephone, cable and sanitary sewer services and facilities have
been extended to the Premises and are available in capacities adequate for the
use as a general commercial facility;
(e) There are no pending or, to the best of Lessor's knowledge,
threatened condemnation or similar proceedings effecting the Premises and Lessor
has not received any notice that such proceedings are contemplated; and
(f) Lessor has no knowledge of any violations of any federal,
state, county or municipal law, ordinance, order, regulation or requirement
effecting all or any portion of the
<PAGE>
Premises and Lessor has received no notice of any such violation issued by any
governmental authority.
(g) The roofs (including facia and soffits) of all buildings
located on the Premises are in good condition and repair, the Improvements are
structurally sound, Lessor has no knowledge of any asbestos in the Buildings or
Improvements, there is no visible evidence of any water leaks, water damage or
structural damage, and that all mechanical items, heating, cooling, electrical,
plumbing systems and machinery are in good working condition as of the date of
this Lease. Lessee may test for radon and asbestos. If any test made by Lessee
reveals the existence of asbestos, Lessor shall be obligated to remove or abate
the asbestos at Lessor's sole cost and expense.
(h) Lessor is a Florida corporation duly organized, validly
existing and in good standing under the laws of the State of Florida. Lessor has
full power to own the Premises and to conduct its present business from the
Premises.
(i) Lessor is not subject to any charter, by-law, rule, agreement
or restriction of any kind or character which would prevent the consummation of
this Lease and the transactions contemplated hereby. The Board of Directors and
shareholders of Lessor have approved this Lease and the transactions
contemplated hereby. Lessor (and each individual executing this Lease) has full
power and authority to execute this Lease, fully perform hereunder and to
consummate the transactions contemplated hereby without the consent or joinder
of any other party.
(j) To the best of Lessor's knowledge, no portion of the Premises
is affected by any special assessments.
(k) Lessor has received no notice from any governmental authority
that its operation of the Premises, or any part thereof, is in violation of any
applicable laws, ordinances, regulations, statutes, governmental rules or
Environmental Laws.
(l) No party, entity or individual, other than Lessor, is in
possession of any portion of the Premises.
(m) To the best of Lessor's knowledge (i) neither the Premises,
nor the use or operation thereof by Lessor as an automobile dealership, violates
any land use, Environmental Laws, hazardous or regulated material and/or waste
handling, storage, treatment, disposal or discharge laws or other laws, building
codes, zoning or other ordinances, rules or regulations, fire insurance
regulations, or covenants, conditions and restrictions whether federal, state,
local or private; and (ii) there exists no material violation of any covenants
or agreements of any kind with tenants, or with any governmental jurisdiction or
private party purporting or acting to restrict in any way the individual use
and/or severability of the Premises; and (iii) neither the Premises nor the
present operation and use, constitute an illegal use under any zoning or land
use law or regulation, and none of the foregoing is the subject of any variance
pursuant to any zoning or land use law or regulation; and (iv) there has not
occurred upon the Premises, any spillage, leakage, discharge or
<PAGE>
release into the air, soil or groundwater of any Hazardous Materials.
(n) Lessor has received no notice and has no knowledge of any
pending or contemplated proceedings (i) to modify or amend any building code or
zoning or land use law or regulation which affects the Premises; (ii) to impose
any special assessment against or upon the Premises or any portion thereof; or
(iii) to modify, amend, suspend, revoke or terminate any environmental,
occupancy, use, operating or other permit issued or pending in connection with
the Premises or the occupancy, use of operation thereon of any tenant thereon.
(o) There are no attachments, executions, assignments for the
benefit of creditors, receiverships, conservatorships or voluntary or
involuntary proceedings in bankruptcy pursuant to any other debtor, relief loss
contemplated or filed by Lessor.
(p) There are no contracts or other obligations outstanding for
the sale, exchange or transfer of the Premises or any portion thereof.
(q) There is no litigation or proceeding pending or threatened
against or relating to Lessor or to any portion of the Premises.
(r) All utilities, including but not limited to, water,
electricity, telephone, cable, and sanitary sewer services and facilities have
been extended to the Premises and are available to the Premises at a reasonable
cost to the Premises and capacity is adequate for the structures existing at the
time the structures were permitted and/or remodeled and adequate for current
usage.
(s) The use of the Premises as an automobile dealership is
permitted under the current zoning classification for the Premises. All permits
associated with use of the Premises as an automobile dealership have been
obtained and are in good standing. The Premises contains the necessary number of
parking spaces to be in compliance with applicable zoning regulations and land
development code of the applicable municipality. To the best of Lessor's
knowledge, all Improvements on the Premises where permitted, conforming
structures under applicable land use, zoning and building laws and ordinances in
effect when the Improvements were constructed. Lessee shall be responsible for
obtaining any special exception permits required by the local municipality.
(t) The Premises and Lessor are not in violation of any permit or
agreement obtained from any governmental body or agency in regards to the
development of the Premises.
<PAGE>
ASSIGNMENT AND SUBLETTING
19.01 The Lessee covenants and agrees not to encumber or mortgage
Lessee's leasehold interest hereunder nor assign this Lease or sublet all or any
part of the Premises without the prior written consent of Lessor, such consent
not to be unreasonably withheld. No assignment or subletting, even with the
consent of Lessor, shall relieve Lessee of its obligations to pay rent any other
sums due by Lessee under this Lease and the performance of all obligations
required by Lessee under this Lease, unless Lessor shall specifically so agree.
ACCESS TO PREMISES
20.01 Lessor and Lessor's representatives shall have the right to enter
upon the Premises at all reasonable times after providing Lessee with prior
written notice for the purpose of inspecting same or for making repairs,
additions or alterations pursuant to the terms herein. Except in cases of
emergency, Lessor and its agents shall be accompanied by Lessee or its agents
when in the Premises, and Lessor shall conduct its examination and make its
repairs in a manner reasonably calculated to cause minimal interference with the
business of Lessee.
SUBORDINATION
21.01 Upon request of the Lessor, Lessee will subordinate its rights
hereunder to the lien of any mortgage, deed of trust (including blanket
mortgages or deeds of trusts covering the Premises or other properties of the
Lessor) or any other security interest which has been or which hereafter may be
placed upon the Premises or any portion thereof, and to any renewals,
modifications, consolidations, replacements and extensions thereof; provided,
Lessee receives a non-disturbance agreement from the mortgage or lien holder
which shall recognize the validity and continuance of this Lease. Within sixty
(60) days of the date hereof, Lessor shall provide to Lessee, non-disturbance
agreements from all existing mortgagees which shall recognize the validity and
continuance of this Lease and provide that so long as Lessee is not in default
in the payment of rent or performance of any obligation under the Lease,
Lessee's possession of the Premises and its rights and privileges under the
Lease or any renewal thereof shall not be diminished or interfered with by the
mortgagee, and estoppel certificates from each mortgagee certifying that not
default exists under any loans, promissory notes or mortgages securing the
Premises. If any Lender does not agree to provide the aforesaid certificate,
Lessee shall have no obligation to subordinate or attorn to said Lender.
SIGNS
22.01 Lessee shall be entitled to place any and all signs necessary to
adequately display the name of Lessee and the business which Lessee is
conducting from the Premises. All of Lessee's signage shall be in compliance
with all applicable laws, codes and ordinances.
<PAGE>
NO WAIVER
23.01 No delay or omission of the exercise of any right by either party
hereto shall impair any such right or shall be construed as a waiver of any
default or as an acquiescence thereto. One or more waivers of any violation or
breach or failure to comply with any of the covenants, terms, provisions or
conditions of this Lease by either party shall not be construed by the other
party as a waiver of any subsequent violation, breach or failure to comply with
the same or any other covenant, term, provision, or condition contained in this
Lease. No requirements whatsoever of this Lease shall be deemed waived or varied
because of either party's failure or delay in exercising its rights resulting
from any default, and Lessor's acceptance of any payment from Lessee with
knowledge of any default shall not constitute a waiver of Lessor's right with
respect to such default, nor of any subsequent default. All remedies provided
for herein shall be construed as cumulative and shall be in addition to every
other remedy otherwise available to Lessor.
SUCCESSOR IN INTEREST
24.01 All provisions herein contained shall bind and inure to the
benefit of the respective parties hereto, their heirs, personal representatives,
successors and assigns.
NOTICES
25.01 Any notice which either party may or is required to give, shall
be given in writing and shall be deemed to have been duly given upon the date
thereof if delivered personally, or by facsimile provided that a duplicate copy
is promptly mailed by U.S. Mail, certified, return receipt requested, or upon
the date following the date thereof if delivered by overnight courier which
provides a receipt, such as Federal Express, in either case with adequate
postage prepaid, addressed to the appropriate party and marked to a particular
individual's attention as hereinafter provided. Each notice shall be effective
upon being so deposited, but the time period in which a response to any notice
must be given or any action taken with respect thereto shall commence to run
from the date of receipt of the notice by the addressee thereof as evidenced by
the return receipt. Rejection or other refusal by the addressee to accept or the
inability of the United States Postal Service or air courier service to deliver
because of a changed address of which no notice was given shall be deemed to be
the receipt of the notice sent as of the next business day following deposit. If
either party to this Lease shall change their address, that party shall notify
the other party of such change by notice delivered in accordance with this
paragraph. The initial addresses of the parties shall be as set forth below, or
at such other place as may be designated by the parties from time to time:
<PAGE>
TO THE LESSOR AT: Roman Fedo
14335 Halter Road
Wellington, Florida 33414
WITH COPY TO: Robert Saylor, Esq.
1615 Forum Place
West Palm Beach, Florida 33401
TO THE LESSEE AT: Smart Choice Automotive Group, Inc.
5200 South Washington Avenue
Titusville, Florida 32780
WITH COPY TO: Randolph Fields, Esquire
Greenberg Traurig
111 North Orange Avenue, Suite 2050
Orlando, FL 32801
Any notice or demand made as set forth above shall be deemed given three (3)
days after the date of mailing thereof or on the date of actual receipt, if
sooner; any other notice or demand not so mailed but delivered by courier
service or by hand delivery shall be deemed given on the date of actual receipt.
Such addresses may be changed from time to time by either party by serving
notices as above provided, but each party shall at all times have a physical
street address within the continental United States of America as one of the
addresses to which notices may be delivered.]
ENTIRE AGREEMENT
26.01 This Lease contains the entire and only agreement between the
parties concerning the Premises and no prior oral or written statement or
representations, if any, of any party hereto or any representative of a part
hereto, not contained in this instrument, shall have any force or effect. This
Lease shall not be modified or terminated in any way except by a written
document executed by Lessor and Lessee. This Lease shall not be binding until it
has been executed by Lessee and Lessor.
<PAGE>
AUTHORITY TO EXECUTE
27.01 Lessor and Lessee do hereby respectively represent to each other
that each has the capacity and authority to enter into this Lease. If either
Lessee or Lessor is a corporation (or partnership), each individual executing
this Lease on behalf of said corporation (or partnership) represents and
warrants that he/she is duly authorized to execute and deliver this Lease on
behalf of said corporation (or partnership) in accordance with the duly adopted
resolution of the Board of Directors of said corporation or in accordance with
the bylaws of said corporation (or under the pertinent partnership agreements),
that any required consents or approvals of third parties have been obtained, and
that this Lease is binding upon said corporation (or partnership) in accordance
with its terms.
LEASE NOT RECORDABLE
28.01 At the request of either party, Lessor and Lessee shall promptly
execute, acknowledge and deliver a memorandum or short form of Lease sufficient
for recording. Said memorandum or short form of Lease shall make specific
reference to Lessee's Right of First Refusal provided in Section 43 of this
Lease. If a memorandum or short form of lease is recorded, on the termination of
this Lease, Lessee shall execute, acknowledge and deliver to Lessor an
instrument in writing releasing and quit-claiming to Lessor all right, title and
interest of Lessee in and to the Premises by reason of this Lease or otherwise.
RADON GAS
29.01 Radon gas is a naturally occurring radioactive gas that when it
has accumulated in a building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Levels of radon that exceed federal
and state guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from your county
public health unit.
TIME OF ESSENCE
30.01 It is understood and agreed between the parties hereto that time
is of the essence of all the terms, provisions, covenants and conditions of this
Lease.
ATTORNEYS' FEES
31.01 In the case of the failure of either party to perform and comply
with any of the covenants and conditions hereof within the time herein
specified, whether suit be brought or not, the party so failing to perform and
comply hereby agrees to pay to the other party hereto all costs, charges, and
expenses of such collection or other enforcement of rights in any suit or
otherwise, including its reasonable attorneys' fees. The prevailing party in any
litigation arising
<PAGE>
out of this Lease, including any appellate proceedings and bankruptcy
proceedings, shall be entitled to the award of its reasonable attorney's fees
and costs.
SEVERABILITY
32.01 If any provision of this Lease or the application thereof to any
person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Lease, or the application of such provisions to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby and each provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
APPLICABLE LAW
33.01 This Lease shall be construed under the laws of the State of
Florida and the venue of any action to enforce rights hereunder shall be in the
county in Florida in which the Premises are located.
LESSOR'S RIGHT TO SATISFY LESSEE'S OBLIGATIONS
34.01 If Lessee fails to observe or perform any term or condition of
this Lease within the grace period, if any, applicable thereto, then Lessor may
after written notice to Lessee perform the same for the account of Lessee. If
Lessor makes any expenditure or incurs any obligation for the payment of money
in connection with such performance for Lessee's account (including reasonable
attorneys' fees and costs in instituting, prosecuting and/or defending any
action or proceeding through appeal), the sums paid or obligations incurred
shall be paid by Lessee to Lessor upon demand. In the event Lessee in the
performance or nonperformance of any term or condition of this Lease should
cause an emergency situation to occur or arise within the Premises, Lessor will
have all rights set forth in this paragraph immediately without the necessity of
providing Lessee any advance notice.
OFFSET STATEMENT
35.01 Upon the request of either party at anytime and from time to
time, Lessor and Lessee agree to execute and deliver to the other within ten
(10) days after receipt of such request, a written instrument, duly executed,
addressed to either Lessor or Lessee, as may be applicable, and/or to any person
designated by either Lessor or Lessee, at their sole cost and expense, (a)
ratifying this Lease; (b) stating the commencement and termination dates of this
Lease and (c) certifying (1) that this Lease is in full force and effect and has
not been assigned, modified, supplemented or amended except by such writing as
shall be stated, (2) that all conditions under this Lease to be performed by
either the Lessor or Lessee have been satisfied (stating exceptions, if any,),
(3) no defenses or offsets against the enforcement of this Lease by Lessor or
Lessee exist (or, if any, stating those claimed), (4) advance rent, if any, paid
by Lessee, (5) the date to which rent has been paid, (6) the amount of security
deposited with Lessor, if any, (7) the options available to Lessee to extend the
term and which options have been exercised, if any, and (8)
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such other information as either party may reasonably require. Persons
receiving such statements shall be entitled to rely upon them.
CAPTIONS AND HEADING
36.01 The captions and headings are inserted only as a matter of
convenience and in no way define, limit, construe, or describe the scope or
intent of such paragraphs of this Lease or in any way affect this Lease.
HAZARDOUS SUBSTANCES
37.01 For purposes of this paragraph, the term "Hazardous Substances"
means and shall include any substances defined as or included in the definition
of "hazardous substances", "hazardous waste", "hazardous materials", "toxic
substances", "contaminants", or any other substances declared to be hazardous or
toxic under any federal, state or local laws, ordinances, rules or regulations
now or hereafter in effect.
37.02 Lessor warrants and represents to Lessee that:
(a) The Premises and the Lessor are not in violation of, or
subject to any existing, pending, or threatened investigation regarding the
Premises by any federal, state or local governmental authority, under any law,
statute, ordinance or regulation pertaining to Hazardous Substances
(collectively, the "Environmental Laws");
(b) The previous uses and ownership of the Premises have not
resulted in the release or disposal of Hazardous Substances on the Premises;
(c) There are no Hazardous Substances or materials which are
being stored or otherwise held on, under or about the Premises, by the Lessor,
except in compliance with all Environmental Laws;
(d) Any handling, transportation, storage, treatment or use of
Hazardous Substances that has occurred on the Premises to date, has been in
compliance with all Environmental Laws;
(e) No leak, spill, release, discharge, omission or disposal of
Hazardous Substances has occurred on the Premises, to date, and the soils and
groundwaters on or under the Premises are free of Hazardous Substances as of the
date of this Lease; and
(f) Lessor has not received any notice of any violation of any
Environmental Laws pertaining to the Premises.
37.03 Lessor agrees to indemnify Lessee and hold Lessee and its
employees, partners, heirs, personal representatives, successors and assigns
harmless from and against any
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and all claims, losses, damages (including all foreseeable and unforeseeable
consequential damages), liabilities, fines, penalties, charges, interest,
administrative or judicial proceedings and orders, judgments, remedial action
requirements, enforcement actions of any kind, and all costs and expenses
incurred in connection therewith (including without limitation attorney's fees
and expenses), directly or indirectly resulting in whole or in part from any
violation of any Environmental Laws applicable to the Premises caused by Lessor
or caused during Lessor's ownership of the Premises. Lessee shall be reimbursed
by Lessor immediately upon demand for any and all sums paid and costs incurred
by Lessee with respect to the foregoing matters. The foregoing Lessor's
environmental indemnity shall survive the expiration or termination of this
Lease and/or any transfer of all or any portion of the Premises, or of any
interest in this Lease.
37.04 Lessee, its agents, employees, contractors or invitees, shall not
use the Premises in any manner that violates any applicable Environmental Laws.
Lessee shall not cause or permit the Premises to be used for the generation,
handling, storage, transportation, disposal or release of any Hazardous
Substances, except as exempted or properly permitted under applicable
Environmental Laws.
INDEPENDENT COVENANTS
38.01 The covenants to pay rent, additional rent and other amounts
hereunder are independent covenants, and Lessee shall not have the right to hold
back, off set, or fail to pay any such amounts for default by Lessor or any
other reason whatsoever.
CONSTRUCTION AND INTERPRETATION
39.01 The fact that a party may be deemed to have drafted or structured
any provision hereof shall not be considered in construing that particular
provision either in favor of or against such party.
QUIET ENJOYMENT
40.01 Upon payment by the Lessee of the rents herein provided, and upon
the observance and performance of all covenants, terms and conditions of
Lessee's part to be observed and performed, Lessee shall peacefully and quietly
hold and enjoy the Premises for the Term of this Lease without hindrance or
interruption by Lessor, subject nevertheless, to the terms and conditions of
this Lease.
RELATIONSHIP OF PARTIES
41.01 Notwithstanding anything contained herein to the contrary, it is
agreed that the Lessor shall in no event be deemed to be a partner or engaged in
a joint venture with, or an associate of, Lessee in the conduct of its business,
nor shall Lessor be liable for any debts incurred by Lessee in the conduct of
its business. Nothing in this Lease contained shall be deemed or construed to
confer upon Lessor any interest in the business of the Lessee. The
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relationship of the parties during the term of this Lease shall at all times
be that of Lessor and Lessee.
BROKERAGE COMMISSION
42.01 Lessee represents and warrants that it has dealt with no person
or entity with respect to the leasing of the Premises, and that it knows of no
other persons or entity who would be entitled to any claim for brokerage
commission or finders fees in connection with the execution of this Lease and
hereby indemnifies Lessor against and holds harmless Lessor from and against all
liabilities arising from any such claim, including, without limitation,
attorney's fees and costs of litigation.
42.02 Lessor represents and warrants that it has dealt with no person
or entity with respect to the leasing of the Premises, and that it knows of no
other persons or entity who would be entitled to any claim for brokerage
commission or finders fees in connection with the execution of this Lease and
hereby indemnifies Lessee against and holds harmless Lessee from and against all
liabilities arising from any such claim, including, without limitation,
attorney's fees and costs of litigation.
RIGHT OF FIRST REFUSAL
43.01 If at any time during the term of this Lease or during any
optional renewal term which is applicable, Lessor receives a bona fide offer to
purchase the Premises which is acceptable to Lessor (hereinafter referred to as
Offer), Lessor shall notify Lessee in writing of Offer and all of its terms and
conditions, in detail (hereinafter referred to as Notice of Offer). Lessee shall
have twenty (20) days from receipt of Notice of Offer in which to notify Lessor
in writing of its election to purchase the Premises in accordance with the terms
and conditions of Offer.
43.02 If Lessee elects to purchase the Premises in accordance with the
terms and conditions of Offer, the closing shall be as specified in Offer.
43.04 If Lessee fails to notify Lessor of its election to purchase the
Premises in accordance with the terms and conditions of Offer within twenty (20)
days from receipt of Notice of Offer, then Lessor may accept Offer from the
third party provided the terms and conditions of Offer are unchanged and the
closing takes place within the time period and on all the terms and conditions
set forth in Offer. This paragraph 43.04 shall apply to any form of exchange of
the Premises for other property. Failure by Lessee, on any given occasion, to
exercise the foregoing right of first refusal shall not be deemed to preclude
Lessee from exercising such right on any subsequent given occasion. The within
right of first refusal shall survive any transfer(s) of the Premises .
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LESSOR'S CONSENT
44.01 Anything in this Lease to the contrary notwithstanding, whenever
according to the terms of this Lease the consent of Lessor shall be required,
Lessor covenants that it shall not unreasonably withhold or delay the granting
of its consent to any action contemplated by Lessee.
COUNTERPARTS
45.01 This Lease may be executed in any number of counterparts, each of
which shall be deemed an original, but all such counterparts shall constitute
but one instrument.
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IN WITNESS WHEREOF, the parties hereto have set their hand and seals
this 30th day of June, 1997.
WITNESSES: LESSOR:
_____________________________________ ROMAN FEDO, INC.
Print Name: TOM CONLAN
/S/ ROMAN FEDO
/S/ JAN CRANK Name: ROMAN FEDO
Title: PRESIDENT
Print Name: JAN CRANK
LESSEE:
/S/ JAMES VARNADOE FIRST CHOICE AUTO FINANCING, INC.,
A FLORIDA CORPORATION
Print Name: JAMES VARNADOE
By: /S/ J. NEAL HUTCHINSON, JR.
/S/ ELIZABETH A. ZYGMUNTOWICZ Name: J. N. HUTCHINSON, JR.
Title: VICE PRESIDENT
Print Name: ELIZABETH A. ZYGMUNTOWICZ
THE UNDERSIGNED, SMART CHOICE AUTOMOTIVE GROUP, INC., joins herein to evidence
its agreement to unconditionally guarantee all obligations of Lessee hereunder.
WITNESSES: GUARANTOR:
/S/ JAMES VARNADOE SMART CHOICE AUTOMOTIVE GROUP, INC.,
A FLORIDA CORPORATION.
Print Name JAMES VARNADOE
/S/ ELIZABETH A. ZYGMUNTOWICZ By: /S/ J. NEAL HUTCHINSON
Name: J. N. HUTCHINSON, JR.
Print Name: ELIZABETH A. ZYGMUNTOWICZ Title: ASS'T VICE PRESIDENT
