-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FUjvf18ZGEBtXrhG7oALcpY/l2V3aw5ezAMjPZZfRxbkKK1XeQulq6AstDwJCv2d bqh9scTOHePHwrpVi6AzYg== 0001016843-99-000917.txt : 19990910 0001016843-99-000917.hdr.sgml : 19990910 ACCESSION NUMBER: 0001016843-99-000917 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990826 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990909 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMART CHOICE AUTOMOTIVE GROUP INC CENTRAL INDEX KEY: 0000949091 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500] IRS NUMBER: 591469577 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-14082 FILM NUMBER: 99708554 BUSINESS ADDRESS: STREET 1: 5200 S WASHINGTON AVE CITY: TITUSVILLE STATE: FL ZIP: 32780 BUSINESS PHONE: 4072690834 MAIL ADDRESS: STREET 1: 5200 S WASHINGTON AVE CITY: TITUSVILLE STATE: FL ZIP: 32780 FORMER COMPANY: FORMER CONFORMED NAME: ECKLER INDUSTRIES INC DATE OF NAME CHANGE: 19950912 8-K 1 U.S. 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 August 26, 1999 Commission file number 1-14082 SMART CHOICE AUTOMOTIVE GROUP, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) FLORIDA 59-1469577 ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 5200 S. Washington Avenue, Titusville, Florida 32780 ---------------------------------------------------- (Address of principal executive offices) (Zip Code) (407) 269-0834 ---------------------------------------------------- (Registrant's telephone number, including area code) --------------------- (Former name, former address and former fiscal year, if changed since last report) SMART CHOICE AUTOMOTIVE GROUP, INC. Form 8-K TABLE OF CONTENTS HEADING PAGE ------- ---- Item 2. Disposition of Assets ...........................................3 Item 5. Other Information ...............................................3 Item 7. Exhibits ........................................................4 SIGNATURES..................................................................4 2 ITEM 2. DISPOSITION OF ASSETS. On August 26, 1999 the Company sold two of its wholly owned subsidiaries, Ecklers Industries, Inc. and Eckler's Racing Bodies, Inc. by means of a merger of these subsidiaries into Ecklers Industries LLC ("LLC"). LLC is a newly formed wholly owned subsidiary of Sun Automotive Partners L.P. The Company received $10,250,000 in cash proceeds that were used primarily to repay two 10% term notes totaling $8.5 million in principal, plus accrued interest. The notes were collateralized by substantially all of the assets as well as all of the issued and outstanding capital stock of Eckler Industries, Inc. the remainder of the proceeds were used for working capital purposes. The cash consideration received from this merger is subject to a Working Capital Adjustment to be determined thirty days after the closing. This adjustment is to be computed based on the difference of the then results of a Working Capital formula compared to the Working Capital Target. The Company does not believe that this adjustment will materially affect, either positively or negatively, the amount of cash consideration already received. In addition, the Company issued 488,000 shares of its common stock to Stevens Inc. as payment for broker fees due in connection with the sale of Ecklers Industries, Inc. and Eckler's Racing Bodies, Inc. valued at $610,000. Based on the knowledge, experience and economic strength of Stevens Inc., the company believes this transaction was exempt from registration with the Commission under section 4(2) of the Securities Act of 1933, as amended. These two subsidiaries of the Company represented the Corvette parts and accessories segment, which sold and distributes Corvette parts and accessories throughout the United States, primarily through its catalog. In January 1999, management of the Company made a decision to discontinue the operations of the new car dealerships segment and the Corvette parts and accessories segment in order to focus the Company's continuing operations exclusively on the retail sale of used cars through its used car stores, as well as the financing of the used cars sold. During the first quarter of 1999, the Company recorded an estimated loss on the disposal of discontinued operations of $800,000. The actual net proceeds received as a result of the sale of the Corvette parts and accessories segment of these discontinued operations is approximately $600,000 less than the value used in determining the estimated loss at the end of the first quarter of 1999. The Company anticipates that it will be required to recognize an additional loss on the disposal of its discontinued operations of approximately $400,000 during the third quarter ending September 30, 1999. Additionally, on August 26, 1999 the Company entered into a lease with Eckler Industries LLC ("Tenant") for the lease of certain parcels of land, buildings, machinery and equipment, fixtures and improvements located at the Company's headquarters in Titusville, Florida. The terms of this lease include an annual basic rent of $130,000, payable monthly, for a period of ten (10) years with two five (5) year renewal options. The lease requires the Tenant to pay all real estate taxes, special and general assessments, insurance premiums, and the maintenance and repair costs and expenses relating to the Premises. The Company has provided a sum not to exceed $275,000 to be used for tenant improvements to the premises. 3 ITEM 5. OTHER EVENTS. On August 27, 1999 the Company announced that Crown Group Inc. had entered into a non-binding Letter of Intent which provides for the merger of Crown Group, Inc.'s Paaco Automotive Group, Inc. subsidiary into the Company in exchange for approximately 51 million shares of the company's common stock. Additional provisions of the agreement include, the conversion of approximately $20 million of the Company's outstanding indebtedness and preferred stock into approximately 30 million shares of the Company's common stock, the sale of up to 4 million shares of the Company's common stock for $2 million to Crown Group Inc. and a loan to the Company by Crown Group of $1 million in the form of a secured debenture convertible into the Company's common stock at $0.50 per share. This proposed transaction is subject to the execution of a Definitive Agreement and conditions of closing, including the negotiation of an agreement with the Company's senior lender, approval by both companies' boards of directors and the Company's shareholders, satisfactory completion of due diligence, necessary regulatory approvals, and the conversion of substantially all of the $20 million of indebtedness and preferred stock into the Company's common stock. The Company's senior lender and respective holders of the indebtedness and preferred stock have not yet agreed to the terms of the proposal; consequently, there is no assurance that these transactions can be completed. If this transaction is completed, Crown will become the major shareholder of the Company, which will remain a publicly-traded company. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits filed herewith. EXHIBIT NO. EXHIBIT DESCRIPTION -------- -------------------- 2.1 Agreement and Plan of Merger by and among Smart Choice Automotive Group, Inc., Eckler Industries, Inc., Eckler's Racing Bodies, Inc., Eckler Industries LLC and Sun Automotive Partners L.P. without Exhibits. 10.92 Lease between the Company, Lessor and Eckler Industries LLC, Lessee, dated August 26, 1999 with attached Exhibit "F" Tenant Work Letter. 99.1 Press release dated August 27, 1999 announcing the Crown Group's intent to acquire a majority ownership of the Company. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on September 9, 1999. SMART CHOICE AUTOMOTIVE GROUP, INC. By: /s/ GARY R. SMITH --------------------- Gary R. Smith, President and Chief Executive Officer 4 EX-2.1 2 EXHIBIT 2.1 ================================================================================ AGREEMENT AND PLAN OF MERGER by and among SMART CHOICE AUTOMOTIVE GROUP, INC., ECKLER INDUSTRIES, INC., ECKLER'S RACING BODIES, INC., ECKLER INDUSTRIES, LLC and SUN AUTOMOTIVE PARTNERS L.P. August 26, 1999 ================================================================================ TABLE OF CONTENTS PAGE ---- 1. Definitions............................................................1 2. The Merger.............................................................5 (a) The Merger.......................................................5 (b) Merger Effective Date............................................5 (c) The Merger Consideration.........................................6 (d) Certificate of Formation of Surviving Company....................6 (e) Delivery of Shares...............................................6 (f) Effectiveness of Merger..........................................6 (g) Working Capital Adjustments......................................6 (h) The Closing......................................................7 (i) Deliveries at the Closing........................................8 3. Representations and Warranties Concerning the Transaction..............8 (a) Representations and Warranties of Seller.........................8 (b) Representations and Warranties of Buyer and Parent..............10 4. Representations and Warranties Concerning the Companies...............11 (a) Organization, Qualification and Corporate Power.................12 (b) Capitalization..................................................12 (c) Noncontravention................................................12 (d) Brokers' Fees...................................................12 (e) Property........................................................13 (f) Subsidiaries....................................................13 (g) Financial Statements............................................13 (h) No Undisclosed or Contingent Liabilities........................13 (i) Absence of Certain Changes......................................14 (j) Compliance with Law; Licenses...................................15 (k) Tax Matters.....................................................16 (l) Real Property...................................................18 (m) Intellectual Property...........................................18 (n) Contracts.......................................................19 (o) Powers of Attorney..............................................20 (p) Litigation, Orders..............................................20 (q) Employee Benefits...............................................20 (r) Environmental Matters...........................................22 (s) Severance Arrangements..........................................23 (t) Insurance.......................................................23 (u) Suppliers.......................................................23 (v) Accounts Receivable.............................................24 ii (w) Certain Interests...............................................24 (x) Labor Matters...................................................24 (y) Bank Accounts...................................................25 (z) Transactions with Affiliates....................................25 (aa) Product Warranties, Defects and Liabilities.....................26 (bb) Inventories.....................................................26 (cc) Prices; Financial Condition.....................................26 (dd) Disclosure......................................................26 5. Pre-Closing Covenants.................................................26 (a) General.........................................................27 (b) Notices and Consents............................................27 (c) Conduct of Business.............................................27 (d) Full Access.....................................................29 (e) Notice of Developments..........................................29 (f) Exclusivity.....................................................29 (g) Environmental Matters...........................................30 6. Post-Closing Covenants................................................30 (a) General.........................................................30 (b) Litigation Support..............................................30 (c) Transition......................................................31 7. Conditions to Obligation to Close.....................................32 (a) Conditions to Obligation of Buyer and Parent....................32 (b) Conditions to Obligation of Seller and the Companies............34 8. Remedies for Breaches of this Agreement...............................35 (a) Survival of Representations and Warranties......................35 (b) Indemnification Provisions for Benefit of Buyer.................36 (c) Indemnification Provisions for Benefit of Seller................37 (d) Matters Involving Third Parties.................................37 (e) Determination of Adverse Consequences...........................37 (f) Other Indemnification Provisions................................38 9. Termination...........................................................38 (a) Termination of Agreement........................................38 (b) Effect of Termination...........................................38 10. Tax Indemnification...................................................39 11. Miscellaneous.........................................................41 (a) Press Releases and Public Announcements.........................41 (b) No Third-Party Beneficiaries....................................42 (c) Entire Agreement................................................42 iii (d) Succession and Assignment.......................................42 (e) Counterparts....................................................42 (f) Headings........................................................42 (g) Notices.........................................................42 (h) Governing Law...................................................43 (i) Waiver of Jury Trial............................................43 (j) Amendments and Waivers..........................................44 (k) Severability....................................................44 (l) Expenses........................................................44 (m) Construction....................................................44 (n) Incorporation of Exhibits and Schedules.........................44 iv Exhibit A Actual Working Capital Accounts Exhibit B Articles of Merger Exhibit C Certificate of Merger Exhibit D Historical Financial Statements Exhibit E Assignment of Trademarks Exhibit F Form of Lease Exhibit G Transition Services Agreement Exhibit H Opinion of Seller Exhibit I Opinion of Buyer Disclosure Schedule Exceptions to Representations and Warranties Concerning the Companies v AGREEMENT AND PLAN OF MERGER This Agreement is entered into as of August 26, 1999, by and among SMART CHOICE AUTOMOTIVE GROUP, INC., a Florida corporation ("Seller"), ECKLER INDUSTRIES, LLC, a Delaware limited liability company ("Buyer"), SUN AUTOMOTIVE PARTNERS, L.P., a Delaware limited partnership ("Parent"), ECKLER INDUSTRIES, INC., a Florida corporation ("Sub 1"), and ECKLER'S RACING BODIES, INC., a Florida corporation ("Sub 2"). Seller, Parent, Buyer, Sub 1 and Sub 2 are referred to collectively herein as the "Parties." Seller owns all of the outstanding capital stock of Sub 1 and Sub 2 (Sub 1 and Sub 2 are hereinafter collectively referred to as the "Companies"). This Agreement contemplates a transaction in which the Companies would be acquired by Buyer by means of a merger of the Companies into Buyer (the "Merger") for the consideration and upon the terms set forth herein and in accordance with the Delaware General Corporation Law ("DGCL") and the Florida Business Corporation Act ("FBCA"). The Board of Managers of Buyer and the respective Boards of Directors of Seller and the Companies believe that the Merger, upon the terms set forth herein, is in the best interests of their respective companies and in the best interests of the members and stockholders of their respective companies and such Boards have unanimously approved the Merger. Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, the Parties agree as follows: 1. DEFINITIONS. "ACTUAL WORKING CAPITAL" is the sum of $557,000, book cash (whether positive or negative, with negative book cash being generated by, among other things, checks drawn on the bank accounts and not yet paid to or cashed by recipient), accounts receivable, inventory and prepaids minus accounts payable, accrued wages and vacation and other accrued expenses, as reflected on the Closing Balance Sheet calculated using the accounts set forth on EXHIBIT A and adjusted for any amounts distributed by Buyer to the Parent on the Closing Date; provided, however, such calculation will exclude all intercompany accounts. "ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses and fees, including court costs and reasonable attorneys' fees and expenses. "AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act. 1 "BUYER" has the meaning set forth in the preface above. "CASH" means cash and cash equivalents (including marketable securities and short-term investments) calculated in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements. "CLOSING" has the meaning set forth in Section 2(h) below. "CLOSING DATE" has the meaning set forth in Section 2(h) below. "CODE" means the Internal Revenue Code of 1986, as amended. "COMPANIES" has the meaning set forth in the preface above. "CONFIDENTIAL INFORMATION" means any information concerning the businesses and affairs of the Companies that is not already generally available to the public. "DISCLOSURE SCHEDULE" has the meaning set forth in Section 4 below. "EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any Multiemployer Plan) or (d) Employee Welfare Benefit Plan or other employee benefit plan, stock option, bonus or incentive plan, severance pay policy or agreement, deferred compensation agreement or similar plan, arrangement or agreement, in each case referred to in the foregoing clauses (a) through (d), maintained, sponsored by or contributed to by Sub 1 or Sub 2, or by Seller with respect to employees of Sub 1 or Sub 2. "EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA (ss)3(2). "EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA (ss)3(1). "ENVIRONMENTAL LAWS" means all federal, state and local, provincial and foreign, civil and criminal laws, regulations, rules, ordinances, codes, decrees, judgments, directives or judicial or administrative orders relating to pollution or protection of the environment, natural resources or human health and safety, including, without limitation, laws relating to releases or threatened releases of Hazardous Substances (including, without limitation, releases to ambient air, surface water, groundwater, land, surface and subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport, disposal or handling of Hazardous Substances. "Environmental Laws" include, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. (ss)601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (ss)1801 et seq. ), the Resource Conservation and Recovery Act (42 U.S.C. (ss) 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. (ss) 251 et seq.), the Clean Air Act (42 U.S. C. (ss)7401 et seq.) , the 2 Toxic Substances Control Act (15 U.S.C. (ss)2601 et seq.), the Oil Pollution Act (33 U.S.C. (ss)2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. (ss)11001 et seq.), the Occupational Safety and Health Act (29 U.S.C. (ss)651 et seq.) and all other state laws analogous to any of the above. "ENVIRONMENTAL LIABILITIES" means all liabilities of the Companies which (i) arise under or relate to violations of Environmental Laws or arise in connection with or related to any matter disclosed or required to be disclosed in Section 4(q) of the Disclosure Schedule and (ii) are attributable to actions occurring or conditions existing on or prior to the Closing Date. "EPA" means the United States Environmental Protection Agency. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "FBCA" means the Florida Business Corporation Act. "FINANCIAL STATEMENT" has the meaning set forth in Section 4(g) below. "GAAP" means United States generally accepted accounting principles as in effect as of the Closing Date or as of such date as otherwise stated herein. "HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "HAZARDOUS SUBSTANCES" means any toxic or otherwise hazardous substance, which is regulated under Environmental Laws. "INDEMNIFIED PARTY" has the meaning set forth in Section 8(d)(i) below. "INDEMNIFYING PARTY" has the meaning set forth in Section 8(d)(i) below. "INTELLECTUAL PROPERTY" has the meaning set forth in Section 4(m) below. "KNOWLEDGE" means actual knowledge of an executive officer of the Party without independent investigation. "LICENSES" has the meaning set forth in Section 4(j) below. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of the Companies, taken as a whole, PROVIDED that in determining whether there has been a Material Adverse Effect, the following matters will not be considered: (i) any changes in the pricing of products purchased by the Companies and (ii) any changes in the financial condition of a customer or supplier of the Companies. 3 "MERGER CONSIDERATION" has the meaning set forth in Section 2(c) below. "MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section 4(g) below. "MOST RECENT FISCAL QUARTER END" has the meaning set forth in Section 4(g) below. "MULTIEMPLOYER PLAN" has the meaning set forth in ERISA (ss)3(37). "ORDINARY COURSE OF BUSINESS" means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency). "PARENT" has the meaning set forth in the preface above. "PARTY" has the meaning set forth in the preface above. "PBGC" means the Pension Benefit Guaranty Corporation. "PERSON" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity (or any department, agency or political subdivision thereof). "REPORTABLE EVENT" has the meaning set forth in ERISA /section/4043. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance, charge or other security interest, other than (a) mechanic's, materialmen's and similar liens, (b) liens for taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) purchase money liens and liens securing rental payments under capital lease arrangements and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money. "SELLER" has the meaning set forth in the preface above. "SUB 1 SHARE" means any share of the common stock, par value $.01 per share, of Sub 1. "SUB 2 SHARE" means any share of the common stock, par value $.01 per share, of Sub 2. 4 "SUBSIDIARY" means any entity with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the board of directors or Persons performing similar functions. "TAX AFFILIATE" means any affiliated, combined or unitary group of which the Companies are or were a member, as the case may be. "TAXES" means all taxes, charges, fees, imposts, levies or other assessments of any kind, including, without limitation, all income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, and property taxes, customs duties, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority (domestic or foreign) and will include any transferee liability in respect of taxes and any liability under any tax sharing, tax indemnity, tax allocation or similar agreement (whether or not written). "TAX RETURN" means all returns, declarations, reports, estimates, information returns and statements required to be filed in respect of any Taxes. "THIRD-PARTY CLAIM" has the meaning set forth in Section 8(d) below. "WORKING CAPITAL ADJUSTMENT" means the amount, if any, by which the Working Capital Target exceeds the Actual Working Capital. "WORKING CAPITAL TARGET" means $936,000. 2. THE MERGER. (a) THE MERGER. Subject to and in accordance with the terms and conditions of this Agreement, the DGCL and the FBCA, the Companies and Buyer will execute and deliver for filing to (i) the Department of State of the State of Florida Articles of Merger in the form attached hereto as EXHIBIT B and (ii) the Secretary of State of the State of Delaware a Certificate of Merger in the form attached hereto as EXHIBIT C. Upon filing of the Articles of Merger and the Certificate of Merger, the Companies will be merged (the "Merger") with and into Buyer, which will be the surviving corporation. The terms and conditions of the Merger and the Plan of Merger will be as provided in the Certificate of Merger, the Articles of Merger, the DGCL and the FBCA. (b) MERGER EFFECTIVE DATE. At the Merger Effective Time (as defined in Section 2(h)), the Companies will be merged with and into Buyer in accordance with the Articles of Merger and the Certificate of Merger, and the separate existence of the Companies will cease. Buyer, as the party surviving the Merger, is hereinafter sometimes referred to as the "Surviving Company." 5 (c) THE MERGER CONSIDERATION. For purposes of this Agreement, the "Merger Consideration" will consist of a $10,250,000 payment (the "Closing Payment"), payable on the Closing Date by Buyer to Seller by wire transfer of immediately available funds to such account as Seller designates. The Merger Consideration may be adjusted pursuant to Section 2(g) of this Agreement. (d) CERTIFICATE OF FORMATION OF SURVIVING COMPANY. At the Merger Effective Time, the Certificate of Formation of Buyer will become the Certificate of Formation of the Surviving Company; and, subsequent to the Merger Effective Time, such Certificate of Formation will be the Certificate of Formation of the Surviving Company until changed as provided by law. (e) DELIVERY OF SHARES. At the Merger Effective Time: (i) in exchange for the outstanding shares of Sub 1 and Sub 2, Buyer will pay to Seller the Merger Consideration; and (ii) Seller will deliver to Buyer at the Closing (as defined in Section 2(h) hereof) the certificates representing the Sub 1 Shares and Sub 2 Shares, duly endorsed in blank by Seller or accompanied by blank stock powers. Seller agrees to cure any deficiencies with respect to the endorsement of the certificates or other documents of conveyance with respect to such Sub 1 Shares or Sub 2 Shares or with respect to the stock powers accompanying the Sub 1 Shares or Sub 2 Shares. The certificates representing the Sub 1 Shares and Sub 2 Shares so delivered will forthwith be canceled. (f) EFFECTIVENESS OF MERGER. The Merger will become effective and all transactions contemplated by this Agreement, including the delivery of Sub 1 Shares and Sub 2 Shares and the delivery by wire transfer of the Merger Consideration will occur on the Closing Date. The time at which the Merger is effected will be referred to as the "Merger Effective Time." (g) WORKING CAPITAL ADJUSTMENTS. (i) WORKING CAPITAL. Within 30 days following the Closing Date, the Surviving Company will prepare a balance sheet of the Surviving Company as of the Closing Date (the "Closing Balance Sheet"). The Closing Balance Sheet will be prepared in accordance with Sub 1's or Sub 2's internal and actual accounting practices as of June 30, 1999, whether in accordance with GAAP or otherwise. In the event that the Closing Balance Sheet states that the Actual Working Capital was less than the Working Capital Target, then the Surviving Company will deliver a written notice (the "Working Capital Adjustment Notice") to Seller setting forth the Actual Working Capital and the Working Capital Adjustment due to the Surviving Company from Seller; PROVIDED, HOWEVER, the parties acknowledge that the Working Capital Target was prepared in accordance with Sub 1's or Sub 2's internal and actual accounting practices as of June 30, 1999, whether in accordance with GAAP or otherwise. In the event that the Actual Working Capital is more than the Working Capital Target, then Seller will deliver a Working Capital Adjustment Notice to Buyer setting forth the Actual Working Capital and the Working 6 Capital Adjustment due to Seller from the Surviving Company. Any amounts due pursuant to this Section 2(g)(i) will be paid in cash to the Surviving Company or Seller, as the case may be, within 15 business days after delivery of the Working Capital Adjustment Notice; PROVIDED, HOWEVER, that if the party obligated to make such payment disputes any portion of the Working Capital Adjustment Notice, no such disputed amounts will be required to be paid until the resolution of such dispute in accordance with Section 2(g)(ii), whereupon any amounts due will be paid within five business days of such resolution, provided that all undisputed amounts will be promptly paid. (ii) DISPUTES. Notwithstanding anything in this Section 2(g) to the contrary, if there is any Working Capital Adjustment and Seller or the Surviving Company disputes any item on the Working Capital Adjustment Notice, then such party will notify the other in writing of each disputed item (collectively, the "Disputed Amounts") and specify the amount thereof in dispute within 15 business days after the delivery of the Working Capital Adjustment Notice. If the Surviving Company and Seller cannot resolve any such dispute, then such dispute will be resolved by an independent accounting firm which is reasonably acceptable to the Surviving Company and Seller (the "Independent Accounting Firm"). If the Surviving Company and Seller cannot agree upon a mutually acceptable Independent Accounting Firm within 10 days after delivery of the notice with respect to the Disputed Amounts, the Surviving Company and Seller will each select an independent accounting firm, and the Independent Accounting Firm will be selected by the firms chosen by the Surviving Company and Seller. The determination of the Independent Accounting Firm (i) will be made as promptly as practicable; (ii) will be prepared in accordance with Sub 1's or Sub 2's internal and actual accounting practices as of June 30, 1999, whether GAAP or otherwise, and based solely on the accounts set forth on EXHIBIT A (Parent, Buyer and Seller acknowledge that the accounts set forth on EXHIBIT A were used to calculate the Working Capital Target of $936,000 as of June 30, 1999); and (iii) will be final and binding on the parties, absent manifest error which error may only be corrected by such Independent Accounting Firm. Any expenses relating to the engagement of the Independent Accounting Firm will be allocated evenly between the Surviving Company and Seller. Pending resolution of any such dispute by the Independent Accounting Firm, no such Disputed Amount will be due to the Surviving Company or Seller, provided that all undisputed amounts will be promptly paid. Upon the final determination of the amounts due, if any, such amounts will be paid in accordance with the provisions of this Section 2(g)(ii). (h) THE CLOSING. (i) The closing of the transactions contemplated by this Agreement (the "Closing") will take place at the offices of Troutman Sanders, LLP in Atlanta, Georgia, on or before five business days from the date of execution of this Agreement, or such other date as agreed by the Parties (the "Closing Date"). 7 (ii) On the Closing Date, the Articles of Merger, the Certificate of Merger and any other documents executed in accordance with the DGCL and the FBCA, together with any required certificates, will be filed with the Secretary of State of Delaware and the Secretary of State of Florida in accordance with the provisions of the DGCL and the FBCA. The Merger will become effective upon such filing or at such later time as may be specified in such filing (the "Merger Effective Time"). (i) DELIVERIES AT THE CLOSING. At the Closing, (i) Seller will deliver to Buyer the various certificates, instruments and documents referred to in Section 7(a) below, (ii) Buyer will deliver to Seller the various certificates, instruments and documents referred to in Section 7(b) below, (iii) Seller will deliver to Buyer stock certificates representing all of the outstanding Sub 1 Shares and Sub 2 Shares, endorsed in blank or accompanied by duly executed assignment documents and (iv) Buyer will deliver to Seller the Closing Payment. 3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to Buyer that the statements contained in this Section 3(a) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made on such date and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3(a)) with respect to itself. (i) ORGANIZATION OF SELLER. Seller is duly organized, validly existing and in good standing under the laws of the State of Florida. (ii) AUTHORIZATION OF TRANSACTION. Seller has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by Seller. This Agreement has been duly executed and delivered by Seller and constitutes the valid and legally binding obligation of Seller, enforceable against Seller in accordance with its terms and conditions, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and the availability of equitable remedies may be limited by equitable principles of general applicability. Except those that have been made or waived by Buyer in writing, Seller is not required to give any notice to, make any filing with or obtain any authorization, consent or approval of any governmental or regulatory body or authority or other Person in order to consummate the transactions contemplated by this Agreement. (iii) NONCONTRAVENTION. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate its charter or bylaws, (B) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency or court to which Seller is subject or (C) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the 8 right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which Seller is a party or by which it is bound or to which any of its assets is subject, except, in the case of clauses (B) and (C), for such violations, conflicts, breaches or defaults as (i) do not and will not affect the validity and enforceability of this Agreement or (ii) do not and will not have, in the aggregate, any Material Adverse Effect. (iv) BROKERS' FEES. Except as set forth on Section 3(a)(iv) of the Disclosure Schedule, Seller has no liability or obligation to pay any fees or commissions to any broker, finder, agent or other Person with respect to the transactions contemplated by this Agreement. (v) COMPANIES' SHARES. Seller holds of record and owns beneficially all of the outstanding Sub 1 Shares and Sub 2 Shares free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), taxes, pledges, liens, encumbrances, charges, security interests, options, warrants, purchase rights, contracts, commitments, equities, claims and demands except as set forth in Section 3(a)(v) of the Disclosure Schedule. Seller is not a party to any option, warrant, purchase right or other contract or commitment that could require Seller to sell, transfer or otherwise dispose of any capital stock of the Companies (other than this Agreement). Seller is not a party to any voting trust, proxy or other agreement or understanding with respect to the voting of any capital stock of the Companies. (vi) CONSENTS AND APPROVALS. No notice to, declaration, filing or registration with, or authorization, consent or approval of, or permit from, any domestic or foreign governmental or regulatory body or authority or any other Person is required to be made or obtained by Seller in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, except for such permits, consents, licenses, approvals or authorizations or declarations, exemptions, filings or registrations (a) disclosed in Section 3(a)(vi) of the Disclosure Schedule hereto or (b) the failure of which to obtain or make do not and will not (A) affect the validity and enforceability of this Agreement or (B) either individually or in the aggregate have a Material Adverse Effect. (vii) LITIGATION. Except as set forth in Section 3(a)(vii) of the Disclosure Schedule, there is no action, suit or proceeding pending against, or to the Knowledge of Seller threatened against or affecting, Seller before any court or arbitrator or any foreign or domestic governmental or regulatory body or agency which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement. 9 REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT. Buyer and Parent represent and warrant to Seller that the statements contained in this Section 3(b) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made on such date and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3(b)). (i) ORGANIZATION OF BUYER. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Parent is a limited partnership duly formed, validly subsisting and in good standing under the laws of the jurisdiction of its formation. (ii) AUTHORIZATION OF TRANSACTION. Buyer has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. Parent has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by Buyer and Parent. This Agreement has been duly executed and delivered by Parent and Buyer and constitutes the valid and legally binding obligation of Buyer and Parent, enforceable against Buyer and Parent in accordance with its terms and conditions, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and the availability of equitable remedies may be limited by equitable principles of general applicability. Neither Buyer nor Parent is required to give any notice to, make any filing with, or obtain any authorization, consent or approval of any governmental or regulatory body or authority or other Person in order to consummate the transactions contemplated by this Agreement. (iii) NONCONTRAVENTION. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any government, governmental agency or court to which Buyer is subject or any provision of its charter or bylaws or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which Buyer or Parent is a party or by which they are bound or to which any of their assets are subject, except for such violations, conflicts, breaches or defaults as (i) do not and will not affect the validity and enforceability of this Agreement and have a Material Adverse Effect on Buyer or Parent. (iv) BROKERS' FEES. Neither Buyer nor Parent has any liability or obligation to pay any fees or commissions to any broker, finder, agent or other Person with respect to the transactions contemplated by this Agreement. 10 (v) FINANCING. Buyer has sufficient funds available to pay the Merger Consideration. (vi) LITIGATION. There is no action, suit or proceeding pending against, or to the Knowledge of Buyer or Parent threatened against or affecting, Buyer or Parent before any court or arbitrator or any foreign or domestic governmental or regulatory body or agency which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement. (vii) DUE DILIGENCE. (A) Each of Buyer and Parent is an informed and sophisticated Person and is experienced in the evaluation and purchase of companies such as the Companies. In making the decision to enter into this Agreement and consummate the transactions contemplated hereby, each of Buyer and Parent has relied on its own independent investigation of the Companies as of this date and upon the representations and warranties and covenants in this Agreement and has relied on the investigations conducted by Buyer's agents (including, without limitation, Sun Capital Partners, Inc.). (B) Each of Buyer and Parent acknowledges that Seller has made no representation or warranty as to the prospects, financial or otherwise, of the Companies. Buyer has conducted its own inspection and examination of the Companies or has relied on the inspection and examination of the Companies conducted by Buyer's agents (including, without limitation, Sun Capital Partners, Inc.) and is not relying on representations or warranties of any nature made by or on behalf of or imputed to Seller except as expressly set forth in this Agreement. (viii) NO KNOWLEDGE OF BREACH. Neither Buyer, Parent nor Buyer's agents (including, without limitation, Sun Capital Partners, Inc.) knows of any breach of warranty or any misrepresentation by Seller or the Companies hereunder. (ix) TOTAL ASSETS AND SALES. Neither Buyer nor Parent and their subsidiaries, taken in the aggregate, has total assets or annual net sales of $100,000,000 or more. 4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES. Seller and the Companies represent and warrant to Buyer and Parent that the statements contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made on such date and as though the Closing Date were substituted for the date of this Agreement throughout this Section 4), except as set forth in the disclosure schedule delivered by Seller to Buyer on the date hereof and initialed by the Parties (each section of which qualifies the correspondingly numbered representation and warranty or covenant to the extent specified therein) (the "Disclosure Schedule"). 11 (a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Companies are corporations duly organized, validly existing and in good standing under the laws of the State of Florida. The Companies are duly authorized to conduct business and are in good standing under the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have a Material Adverse Effect. The copies of the articles of incorporation and bylaws of the Companies, as previously delivered to Buyer by Seller, are complete and correct copies of such instruments as currently in effect. The Companies have the requisite corporate power and authority to carry on the business in which they are engaged and to own and lease the properties used by them. Section 4(a) of the Disclosure Schedule lists the directors and officers of the Companies. (b) CAPITALIZATION. The entire authorized capital stock of Sub 1 consists of 100 Sub 1 Shares, all of which are issued and outstanding. The entire authorized capital stock of Sub 2 consists of 100 Sub 2 Shares, all of which are issued and outstanding. All of the issued and outstanding Sub 1 Shares and Sub 2 Shares have been duly authorized, are validly issued, fully paid and nonassessable, and are held of record by Seller. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contracts or commitments that could require the Companies to issue, sell or otherwise cause to become outstanding any of their capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to the Companies. (c) NONCONTRAVENTION. Neither the execution and the delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any governmental or regulatory body or authority or court to which Sub 1 or Sub 2 is subject (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which Sub 1 or Sub 2 is a party or by which Sub 1 or Sub 2 is bound or to which any of their assets are subject (or result in the imposition of any pledge, lien, encumbrance, charge or security interest upon any of their assets), except where the violation, conflict, breach, default, acceleration, termination, modification, cancellation, failure to give notice or Security Interest would not have a Material Adverse Effect or (iii) violate or conflict with any provision of the articles of incorporation or bylaws of Sub 1 or Sub 2. Except for any notice which has been provided or will be provided on or before Closing and which is described in Section 4(c) on the Disclosure Schedule, the Companies do not need to give any notice to, make any filing with or obtain any authorization, consent or approval of any governmental or regulatory body or authority or other Person in order for the Parties to consummate the transactions contemplated by this Agreement, except where the failure to give notice, to file or to obtain any authorization, consent or approval would not have a Material Adverse Effect. (d) BROKERS' FEES. The Companies do not have any liability or obligation to pay any fees or commissions to any broker, finder, agent or other Person with respect to the transactions contemplated by this Agreement. 12 (e) PROPERTY. The Companies have good and valid title to, or a valid leasehold interest in, all personal property owned, leased or used by the Companies, free and clear of all liens, charges and encumbrances, except for Security Interests. Section 4(e) of the Disclosure Schedule contains a schedule of all assets that have been transferred between Seller or any of its Affiliates on the one hand and Sub 1 or Sub 2 on the other hand since the Most Recent Financial Statements. (f) SUBSIDIARIES. Neither Sub 1 nor Sub 2 directly or indirectly owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest, in any corporation, partnership, joint venture or other business association or entity. (g) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT D are the following financial statements (collectively the "Financial Statements"): (i) for Sub 1, audited balance sheets and statements of income, changes in stockholders' equity, and cash flow as of and for the fiscal years ended September 30, 1994, September 30, 1995 and September 30, 1996, as of and for the three months ended December 31, 1996 and for the period from January 1, 1997 through January 28, 1997, in each case, together with the reports thereon of BDO Seidman LLP, independent certified public accountants; (ii) for Sub 1 and Sub 2, Seller's audited balance sheets and statements of income, changes in stockholders' equity, and cash flow as of and for the fiscal year ended December 31, 1997, which include information for the Companies in each case, together with the reports thereon of BDO Seidman LLP independent certified public accountants; (iii) for Sub 1, combined audited balance sheet (the "Audited Balance Sheet") and Statement of Income, Changes in Stockholder's Equity and Cash Flow (together with the Audited Balance Sheet, the "Audited Financial Statements") as of and for the year ended December 31, 1998, in each case, together with the reports thereon of BDO Seidman LLP, independent certified public accountants; and (iv) Sub 1's unaudited balance sheets and statements of income, changes in stockholders' equity, and cash flow (the "Most Recent Financial Statements") as of and for the six months ended June 30, 1999 (the "Most Recent Fiscal Quarter End") and Sub 1's unaudited balance sheet and statement of income, changes of stockholders' equity and cash flow for the month ended July 31, 1999 ("July 1999 Financials"). The Financial Statements (including the notes thereto) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and present fairly, in all material respects, the financial condition of the Companies as of such dates and the results of operations of the Companies for such periods; PROVIDED, HOWEVER, that the Audited Financial Statements, Most Recent Financial Statements and the July 1999 Financials may be subject to year-end adjustments and the Most Recent Financial Statements and the July 1999 Financials lack footnotes and other presentation items. (h) NO UNDISCLOSED OR CONTINGENT LIABILITIES. Neither Sub 1 nor Sub 2 has any liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise and whether due or to become due) that are not fully reflected on the Audited Balance Sheet, except for liabilities and obligations incurred in the Ordinary Course of Business since the date thereof and which would not have a Material Adverse Effect. 13 (i) ABSENCE OF CERTAIN CHANGES. Since July 31, 1999, each of Sub 1 and Sub 2 has conducted its business only in the Ordinary Course of Business and has not: (i) suffered any material adverse change in its operations, condition (financial or otherwise), assets, liabilities, earnings or working capital; (ii) incurred any liabilities or obligations (absolute, accrued, contingent or otherwise) except in the Ordinary Course of Business or which would not have a Material Adverse Effect (including obligations or liabilities arising from one transaction or a series of related or similar transactions, and all periodic installments or payments under any lease or other agreement providing for periodic installments or payments, as a single obligation or liability), or increased, or experienced any change in any assumptions underlying or methods of calculating, any bad debt, contingency or other reserves; (iii) paid, discharged or satisfied any claims, liabilities or obligations (absolute, accrued, contingent or otherwise) other than the payment, discharge or satisfaction in the Ordinary Course of Business of liabilities and obligations reflected or reserved against in the Most Recent Financial Statements, the July 1999 Financials or incurred in the Ordinary Course of Business since July 31, 1999. (iv) permitted or allowed any of its assets to be subjected to any mortgage, pledge, lien, security interest, encumbrance, restriction or charge of any kind; (v) written down the value of any inventory or written off as uncollectible any notes or accounts receivable, except for writeoffs in the Ordinary Course of Business; (vi) canceled any material debts or, to Seller's Knowledge, waived any claims or rights of substantial value; (vii) sold, transferred or otherwise disposed of any of its properties or assets, except in the Ordinary Course of Business; (viii) disposed of or, to Seller's Knowledge, permitted to lapse any rights to the use of any material patent, trademark, trade name, service mark or copyright, or disposed of or disclosed to any Person other than an Affiliate any trade secret, formula, process or know-how not theretofore a matter of public knowledge or subject to a confidentiality agreement; PROVIDED, HOWEVER, that Buyer acknowledges that the new General Motors Service Parts Operations License Agreement will require a letter of credit in the amount of $315,000 to be provided by Buyer; (ix) granted any material general increase in the compensation of employees (including any such increase pursuant to any bonus, pension, profit sharing or other plan or commitment) or any material increase in the compensation payable or to become 14 payable to any management employee, and no such increase is customary on a periodic basis or required by agreement or understanding; (x) except as set forth in Section 4(i)(x) of the Disclosure Schedule, made any material capital expenditure or material commitment for additions to its property, equipment or intangible capital assets; (xi) made any change in any method of accounting or accounting practice or failed to maintain its books, accounts and records in the Ordinary Course of Business; (xii) failed to maintain in full force and effect all material existing policies of insurance at least at such levels as were in effect prior to such date or canceled any such insurance or taken or failed to take any action that would reasonably be expected to enable the insurers under such policies to avoid liability for claims arising out of occurrences prior to the Closing; (xiii) except for the transaction contemplated hereby, entered into any material transaction or made or entered into any material contract or commitment, or terminated or amended any material contract or commitment, except in the Ordinary Course of Business, and not in excess of current requirements; (xiv) to the Knowledge of Seller, taken any action that would reasonably be expected to have a material adverse effect on its business organization or its current relationships with its employees, suppliers, distributors, advertisers, subscribers or others having business relationships with it; (xv) declared, paid or set aside for payment any distribution in respect of its capital stock or redeemed, purchased or otherwise acquired, directly or indirectly, any shares of its capital stock; or (xvi) agreed to take any action with respect to any of the matters described in this Section 4(i). (j) COMPLIANCE WITH LAW; LICENSES. Except as set forth in Section 4(j) of the Disclosure Schedule, the businesses of Sub 1 and Sub 2 have not been and are not being conducted in violation of any laws (whether statutory or otherwise), rules, regulations, orders, ordinances, judgments, decrees, writs and injunctions of all federal, state, local or foreign governmental authorities (collectively, "Laws"), including all Laws relating to the safe conduct of Sub 1's and Sub 2's business, environmental protection and conservation, antitrust, taxes, consumer protection, currency exchange, equal opportunity, health, sanitation, fire, zoning, building, occupational safety, pension, securities and trademark and copyright, except for such violations as would not, individually or in the aggregate, have a Material Adverse Effect. Each of Sub 1 and Sub 2 holds all licenses, permits, variances, exemptions, authorizations, operating certificates, orders and approvals of all governmental and regulatory bodies and authorities (collectively, "Licenses") that are required for it to own, lease and operate its properties as currently owned, leased and/or operated, as applicable, and conduct its business as currently 15 conducted, except where the failure to hold Licenses would not, individually or in the aggregate, have a Material Adverse Effect. There has occurred no default under or violation of any such License, except for such violations or defaults that would not, individually or in the aggregate, have a Material Adverse Effect. (k) TAX MATTERS. Except as disclosed in Section 4(k) of the Disclosure Schedule: (i) each of the Companies or a Tax Affiliate with respect to the Companies has timely filed (and through the Closing Date will timely file) with the appropriate federal, state, local, foreign and other governmental agencies all Tax Returns required to be filed by or with respect to it, its operations and assets, and as of the time of filing, all such Tax Returns were (and, as to Tax Returns not filed as of the date hereof, will be) true, complete and correct in all material respects; (ii) each of the Companies or a Tax Affiliate with respect to the Companies has (A) timely paid (and through the Closing Date will timely pay) all Taxes that are due and payable with respect to it, its operations and assets, except for Taxes that are being contested in good faith by appropriate proceedings and as to which adequate reserves have been reflected on the Financial Statements; and (B) established (and through and including the Closing Date will establish) reserves that are adequate for the payment of all Taxes not yet due and payable with respect to the results of operations through the Closing Date; (iii) each of the Companies (or a Tax Affiliate on behalf of any of the Companies) has complied with all applicable laws, rules and regulations relating to the payment and withholding of Taxes and has timely withheld from employee wages and paid over (and through the Closing Date will timely withhold and pay over) to the proper governmental authorities all amounts required to be so withheld and paid over for all periods under all applicable laws; (iv) none of the Companies (nor any of their Tax Affiliates on any Company's behalf) has requested (or through the Closing Date will request) any extension of time within which to file any Tax Return, which Tax Return has not since been filed; (v) to the Knowledge of Seller or the Companies, (a) the United States federal income Tax Returns of each of the Companies have not been examined by the Internal Revenue Service ("IRS"), (b) the state and local income or franchise Tax Returns of each of the Companies have not been examined by the relevant taxing authority and (c) no deficiencies have been proposed, asserted or assessed by any federal, state, local foreign or other taxing authority that have not been paid; (vi) no federal, state, local or foreign Tax audits or other administrative proceedings or court proceedings are presently pending with regard to any Taxes for which any of the Companies would be liable; 16 (vii) none of the Companies (nor any of their Tax Affiliates on any Company's behalf) has executed or filed (or through the Closing Date will execute or file) with the IRS or any other taxing authority any agreement or other document extending or having the effect of extending the period for assessment or collection of any Taxes for which any of the Companies would be liable and no power of attorney granted by either of the Companies with respect to any Tax matter is currently (or through the Closing Date will be) in force; (viii) none of the Companies (nor any of their Tax Affiliates on any Company's behalf) has executed or entered into (or through the Closing Date will enter into) any closing agreement pursuant to Section 7121 of the Code, or any predecessor provision thereof or any similar provision of state, local or foreign law; (ix) none of the Companies is (or through the Closing Date will be) a party to, bound by or subject to any obligation under any Tax sharing, Tax indemnity, Tax allocation or similar agreement (whether or not written); (x) none of the Companies (nor any of their Tax Affiliates on any Company's behalf) has filed (or through the Closing Date will file) a consent pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by any of the Companies. (xi) no property owned by any of the Companies is property that Buyer or such Company is or will be required to treat as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within the meaning of Section 168(h)(1) of the Code; (xii) none of the Companies (nor any of their Tax Affiliates on any Company's behalf) (A) has agreed (or through the Closing Date will agree) to or is required to make any adjustment pursuant to Section 481(a) of the Code (or any similar provision of state, local or foreign law) by reason of a change in accounting method initiated by a Company; (B) has Knowledge that the IRS or any taxing authority has proposed any such adjustment or change in accounting method, or (C) has an application pending (or through the Closing Date will file an application) with any taxing authority requesting permission for any change in accounting methods that relates to the business and operations of any of the Companies; (xiii) there is no (and prior to the close of business on the Closing Date there will be no) contract, agreement, plan or arrangement in respect of the Companies covering any Person that, individually or collectively, would reasonably be expected to give rise to the payment of any amount that would not be deductible by Buyer or any of the Companies by reason of Section 280G of the Code (or any similar provision of state, local or foreign law); 17 (xiv) there are no liens for taxes upon the assets of the Companies except for statutory liens for taxes not yet due; (xv) true and complete copies of all federal, state, local and foreign income or franchise Tax Returns of the Companies relating to taxable periods ending on or after January 1, 1995 have been delivered or made available to Buyer; and (xvi) the Companies have not knowingly waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. (l) REAL PROPERTY. (i) The Companies own no real property; and (ii) Section 4(l)(ii) of the Disclosure Schedule lists all real property leased or subleased to the Companies. Seller has delivered to Buyer correct and complete copies of the leases and subleases listed in Section 4(l)(ii) of the Disclosure Schedule (as amended to date). Each lease and sublease listed in Section 4(l)(ii) of the Disclosure Schedule is valid, binding, enforceable against the Companies and in full force and effect except (A) as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and other similar laws relating to or affecting creditors' rights generally and by the application of general equitable principles (whether considered in proceedings at law or equity) and (B) where the illegality, invalidity, nonbinding nature, unenforceability or ineffectiveness would not have a Material Adverse Effect. There is not, under any such lease, any existing default or event of default that would have a Material Adverse Effect (or event which with notice or lapse of time, or both, would constitute a default and in respect of which Sub 1 or Sub 2 has not taken adequate steps to prevent such a default from occurring). (m) INTELLECTUAL PROPERTY. (i) Except as set forth in Section 4(m) of the Disclosure Schedule, each of Sub 1 and Sub 2 owns, free and clear of all liens, mortgages, security interests, charges and encumbrances, and has good title to, or hold adequate Licenses or otherwise possess all rights necessary to use, all patents, trademarks, service marks, trade names, copyrights (including any applications for any of the foregoing), inventions, discoveries, processes, know-how, trade secrets, scientific, technical, engineering and marketing data, object and source codes, and techniques used in the conduct of its business as now conducted (collectively, the "Intellectual Property"). (ii) Section 4(m) of the Disclosure Schedule contains an accurate and complete list of (i) all such trademarks, trade names, service marks and copyrights, and all applications therefor and, with respect to registered items, contains a list of all jurisdictions in which such items are registered and all registration numbers; (ii) all 18 Licenses and other agreements relating thereto; and (iii) all agreements relating to any of the Intellectual Property that Sub 1 or Sub 2 is licensed or authorized to use by others. To the Knowledge of Seller, the trademarks and copyrights constituting a part of the Intellectual Property are valid, subsisting and enforceable, and are duly recorded in the name of Sub 1 and Sub 2 except where failure to duly record will not have a Material Adverse Effect. (iii) To the Knowledge of Seller, no claims have been asserted by any Person challenging or questioning the ownership, validity, enforceability or use by Sub 1 or Sub 2 of any of the Intellectual Property and, to the Knowledge of Seller, there is no valid basis for any such claim; and, to the Knowledge of Seller, no other Person is infringing on the rights of Sub 1 or Sub 2 with respect to any of the Intellectual Property and, to the Knowledge of Seller, the use or other exploitation of the Intellectual Property by Sub 1 and Sub 2 does not infringe on or dilute the rights of any Person. (iv) Seller has delivered to Buyer all documents with respect to any invention, process, design, computer program or other know-how or trade secret included in the Intellectual Property, which documents are accurate in all material respects and reasonably sufficient in detail and content to identify and explain such invention, process, design or computer program. (n) CONTRACTS. (i) Section 4(n)(i) of the Disclosure Schedule lists all written and, to Seller's Knowledge, oral contracts and other agreements to which the Companies are a party the performance of which will involve consideration in excess of $10,000. Seller has delivered to Buyer a correct and complete copy of each written contract or other agreement and a summary of each oral contract or agreement listed in Section 4(n) of the Disclosure Schedule (as amended to date). (ii) To the Knowledge of Seller, all parties to the contracts, commitments, instruments and agreements listed in Section 4(n) of the Disclosure Schedule have complied with the provisions thereof in all material respects and no party is in material default thereunder. (iii) Except as set forth in Section 4(n)(iii) of the Disclosure Schedule, neither Sub 1 nor Sub 2 is a party to or bound by any contracts that require payments in excess of $25,000 by any party thereto and are not cancelable by Sub 1 or Sub 2, as the case may be, on notice of not longer than 30 days. (iv) Subject to obtaining any requisite consents of third parties, the enforceability of the contracts and commitments referred to in Section 4(n)(i) will not be affected in any manner by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby or by the other agreements referred to herein. 19 (v) Except as set forth in Section 4(n)(v) of the Disclosure Schedule, neither Sub 1 nor Sub 2 is a party to or bound by any contracts or commitments with officers, employees, agents, consultants, advisors, salesmen, sales representatives, distributors or dealers that are not cancelable by it on notice of not longer than 30 days and without liability, penalty or premium or any agreement or arrangement providing for the payment of any bonus or commission based on sales or earnings. (o) POWERS OF ATTORNEY. To the Knowledge of Seller, there are no outstanding powers of attorney executed on behalf of the Companies. (p) LITIGATION, ORDERS. Except as set forth in Section 4(p) of the Disclosure Schedule, there are no claims, actions, suits or proceedings pending before any court, arbitrator or governmental or regulatory authority (collectively, "Legal Actions"), or, to the Knowledge of Seller, threatened against or affecting Seller (with respect to its operation of Sub 1 and Sub 2), Sub 1 or Sub 2, except as would not individually or in the aggregate, have a Material Adverse Effect. Except as set forth in Section 4(p) of the Disclosure Schedule, there are no Legal Actions questioning the validity of this Agreement, the transactions contemplated hereby or any action taken or to be taken by Seller, Sub 1 or Sub 2 pursuant to this Agreement or any other agreement contemplated hereby, at law or in equity, before or by any federal, state, local or foreign governmental authority. Neither the Company, Sub 1 nor Sub 2 is subject to any judgment, order or decree entered in any lawsuit or proceeding that has had or is expected to have a Material Adverse Effect. (q) EMPLOYEE BENEFITS. (i) Section 4(q) of the Disclosure Schedule lists each Employee Benefit Plan that Sub 1 or Sub 2 maintains or to which Sub 1 or Sub 2 contributes. (A) To the Knowledge of Seller, each such Employee Benefit Plan (and each related trust, insurance contract or fund) complies in form and in operation in all respects with the applicable requirements of ERISA and the Code, except where the failure to comply would not have a Material Adverse Effect. (B) All contributions (including all employer contributions and employee salary reduction contributions) which are due have been paid to each such Employee Benefit Plan which is an employee Pension Benefit Plan. (C) Each such Employee Benefit Plan which is an Employee Pension Benefit Plan has received a determination letter from the Internal Revenue Service to the effect that it meets the requirements of Code (ss)401(a). (D) As of the last day of the most recent prior plan year, the market value of assets under each such Employee Benefit Plan which is an Employee Pension Benefit Plan (other than any Multiemployer Plan) equaled or exceeded 20 the present value of liabilities thereunder (determined in accordance with then current funding assumptions). (E) Seller has delivered to Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent Form 5500 Annual Report and all related trust agreements, insurance contracts and other funding agreements which implement each such Employee Benefit Plan. (ii) With respect to each Employee Benefit Plan that the Companies maintain or ever have maintained or to which they contribute, ever have contributed or ever have been required to contribute: (A) No Employee Benefit Plan is a "multiemployer plan" (as defined in (ss)4001(a)(3) of ERISA) and neither Seller nor any ERISA Affiliate (defined as any corporation or trade or business (whether or not incorporated) which would be treated as a member of a controlled group including Seller under (ss)4001(a)(14)) has sponsored or contributed to any "multiemployer plan." No event or condition has occurred in connection with which Seller or any of its ERISA Affiliates would be subject to any liability, encumbrance or lien with respect to any Employee Benefit Plan under ERISA, the Code or any other applicable law or under any agreement or arrangement pursuant to or under which Seller or any of its ERISA Affiliates are required to indemnify any Person against such liability, where such liability, individually or in the aggregate, would have a Material Adverse Effect. Except as would not have a Material Adverse Effect, (i) there are no pending or, to the Knowledge of Seller, threatened claims, suits, audits or investigations related to any Employee Benefit Plan and (ii) no Employee Benefit Plan provides post-retirement welfare benefits to any Employees other than as required by law. (B) No such Employee Benefit Plan which is an Employee Pension Benefit Plan has been completely or partially terminated or been the subject of a Reportable Event as to which notices would be required to be filed with the PBGC. No proceeding by the PBGC to terminate any such Employee Pension Benefit Plan has been instituted. (C) No action, suit, proceeding, hearing or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending, except where the action, suit, proceeding, hearing or investigation would not have a Material Adverse Effect on the financial condition of the Companies, taken as a whole. 21 (D) The Companies have not incurred any liability to the PBGC (other than PBGC premium payments) or otherwise under Title IV of ERISA (including any withdrawal liability) with respect to any such Employee Benefit Plan which is an Employee Pension Benefit Plan. (E) The consummation of the transactions contemplated by this Agreement (alone or in connection with any subsequent event, including a termination of employment) will not (i) accelerate the vesting or payment of any economic benefit provided or made available to any employees of Sub 1 or Sub 2, (ii) increase the amount of any economic benefit provided or made available to any such employees or (iii) accelerate or increase the funding obligation of Sub 1 or Sub 2 with respect to any Employee Benefit Plan. (F) Since December 31, 1998, there has not occurred any amendment to, or adoption of, any Employee Benefit Plan that increases the obligations of Sub 1 or Sub 2 or any granting by either of them to a current or former director or officer of any increase in compensation or bonus, except as required under then-existing employment agreements. (r) ENVIRONMENTAL MATTERS. (i) Except as would not reasonably be expected to have a Material Adverse Effect or as disclosed on Section 4(r)(i) of the Disclosure Schedule, as of the date hereof, no written notice, notification, demand, request for information, citation, summons or complaint has been received or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending or, to Seller's Knowledge, threatened by any governmental entity or other Person with respect to any (A) alleged violation by the Companies of any Environmental Law or liability thereunder, (B) alleged failure by the Companies to have any permit, certificate, license, approval, registration or authorization required under any Environmental Law in connection with the conduct of their businesses or (C) release of Hazardous Substances by the Companies. (ii) Except as disclosed on Section 4(r)(ii) of the Disclosure Schedule, to Seller's Knowledge, as of the date hereof, there are no Environmental Liabilities that have had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (iii) Except as set forth in Section 4(r)(iii) of the Disclosure Schedule, to the Knowledge of Seller, no state of facts exists as to environmental matters or Hazardous Substances that involves the reasonable likelihood of a material capital expenditure by Sub 1 or Sub 2 or that may otherwise have a Material Adverse Effect, and no Hazardous Substances have been treated, stored or disposed of, or otherwise deposited, in or on or are present beneath the properties owned, leased or used by Sub 1 or Sub 2 in violation of or which may be required to be investigated or remediated under any applicable 22 Environmental Laws. The environmental compliance programs of Sub 1 and Sub 2 comply in all material respects with all Environmental Laws. (iv) Except as set forth in Section 4(r)(iv) of the Disclosure Schedule, to the Knowledge of Seller, there are no Hazardous Substances present, and there has been no disposal, escape, seepage, leakage, spillage, discharge, emission, release or threatened release of any Hazardous Substance (a) on, from or affecting any of the Subject Properties, or (b) for which Sub 1 or Sub 2 is or is alleged to be responsible as a result of conduct occurring or conditions existing at or before Closing except those that are used by Sub 1 or Sub 2 in the Ordinary Course of Business and are stored and used in compliance with all Environmental Laws. (s) SEVERANCE ARRANGEMENTS. Except as set forth on Section 4(s) of the Disclosure Schedule, neither Sub 1 nor Sub 2 has entered into any severance or similar arrangement in respect of any Personnel that will result in any obligation (absolute or contingent) of Buyer, the Companies or any other Person to make any payment to any such Personnel following termination of employment or consummation of the transactions contemplated hereby. (t) INSURANCE. The assets, properties and operation of the Companies are insured under various policies of general liability and other forms of insurance, all of which are listed on Section 4(t) of the Disclosure Schedule. All such policies are in full force and effect in accordance with their terms, all premiums with respect thereto covering all periods up to and including the Closing Date have been paid, no notice of cancellation has been received and there is no existing default or event which, with the giving of notice or lapse of time or both, would constitute a default thereunder and the coverage provided thereby, with respect to any act or event occurring on or prior to the Closing Date, will not in any way be affected by or terminate or lapse by reason of the transactions contemplated by this Agreement. Such policies are in amounts which are adequate in relation to the businesses and assets of the Companies. No risks with respect to the business of Sub 1 or Sub 2 have been designated by any of them or Seller as being self-insured. Neither Sub 1 or Sub 2, nor Seller in respect of either of Sub 1 or Sub 2, has been refused any insurance nor has coverage been limited by any insurance carrier to which any of them has applied for such insurance or with which any of them has carried such insurance in the last three years. (u) SUPPLIERS. Section 4(u) of the Disclosure Schedule sets forth a list of Sub 1's and Sub 2's ten largest suppliers in terms of purchases during the five months ended May 31, 1998, showing the approximate total purchases by Sub 1 and Sub 2 from each such supplier during such year. No material adverse change has occurred in the business relationship of Sub 1 or Sub 2 with any such supplier since June 1, 1999, and, to Seller's Knowledge, no facts exist and no events have occurred that would reasonably be expected result in a material adverse change to any such relationship. (v) ACCOUNTS RECEIVABLE. Section 4(v) of the Disclosure Schedule sets forth a true and complete list of all accounts receivable of Sub 1 and Sub 2 as of the date of the Most Recent Financial Statements and the Most Recent Fiscal Quarter End and the aging thereof. All 23 accounts receivable of Sub 1 and Sub 2, whether reflected on such balance sheets or subsequently created through the Closing Date, represent sales actually made or services actually performed in the Ordinary Course of Business and, except as otherwise listed as uncollectible on Schedule 4(v), are current and either have been collected in full or will be collectable in full, without any setoff subject to any returns in the Ordinary Course of Business. (w) CERTAIN INTERESTS. Except as set forth in Section 4(w) of the Disclosure Schedule, neither Seller, Sub 1 nor Sub 2, nor any officer, director or shareholder thereof, nor any of their respective Affiliates, has (a) any direct or indirect interest (other than the ownership of less than one percent of the outstanding securities of a publicly held company) in any corporation or business that is involved in or competes with Sub 1 or Sub 2 and as owner of the property leased to the Companies or (b) any direct or indirect interest in any property or assets used by, or relating to, Sub 1 or Sub 2 or their respective businesses, except through the ownership of common stock of Sub 1 and Sub 2. The Disclosure Schedule sets forth a complete list of all agreements and arrangements among Sub 1 and Sub 2, on the one hand, and each of their respective officers, directors, shareholders and their respective immediate family members, on the other hand, and true and correct copies of all such agreements and arrangements have been delivered to Buyer. (x) LABOR MATTERS. (i) Each of Sub 1 and Sub 2 has for the past three years and is currently complying in all material respects with all applicable laws relating to employment and employment practices, terms and conditions of employment, and wages and hours, and is not engaged in any unfair labor practice or unlawful employment practice. (ii) There is no unfair labor practice charge or complaint against Sub 1 or Sub 2, or against Seller with respect to Sub 1 or Sub 2, pending or, to the Knowledge of Seller, threatened before the National Labor Relations Board nor, to the Knowledge of Seller, is there any basis for any such charge or complaint. (iii) To the Knowledge of Seller, there is no labor strike, slowdown or work stoppage pending or threatened against Sub 1 or Sub 2. (iv) Neither Sub 1 nor Sub 2 has experienced any significant work stoppages or been a party (nor has Seller been a party with respect to Sub 1 or Sub 2) to any proceedings before the National Labor Relations Board involving any issues which would have a Material Adverse Effect for the past three years or been a party to any arbitration proceeding arising out of or under collective bargaining agreements for the past three years. (v) Except as set forth in Section 4(x)(v) of the Disclosure Schedule, there is no material charge or complaint pending or, to the Knowledge of Seller, threatened against Sub 1 or Sub 2, or against Seller with respect to Sub 1 or Sub 2, before the Equal Employment Opportunity Commission or the Department of Labor or any state or local agency of similar jurisdiction. No employees of Sub 1 or Sub 2 are represented by any 24 labor union and there is no collective bargaining agreement in effect with respect to such employees. During the past five years, to the Knowledge of Seller, no labor union has engaged in any organizing activities with respect to the employees of Sub 1 or Sub 2. (y) BANK ACCOUNTS. Section 4(y) of the Disclosure Schedule sets forth the names and locations of all banks, trust companies, savings and loan associations and other financial institutions at which Sub 1 or Sub 2 maintains safe deposit boxes or accounts of any nature and the names of all persons authorized to draw thereon, make withdrawals therefrom or have access thereto. On and after the Closing, all monies and accounts arising out of, relating to or established for the businesses will be held by, and accessible only to, Sub 1 or Sub 2. (z) TRANSACTIONS WITH AFFILIATES. Except as set forth in Section 4(z) of the Disclosure Schedule, (i) no Affiliate of Sub 1 or Sub 2 is an employee, consultant, competitor, customer, distributor, supplier or vendor of, or is party to any contractual obligations with, Sub 1 or Sub 2 and (ii) no officer or director of Sub 1 or Sub 2 is an Affiliate of any competitor, customer, distributor, supplier or vendor of Sub 1 or Sub 2. Except as set forth in Section 4(z) of the Disclosure Schedule, none of the assets (real, personal, tangible or intangible) or other property owned by or used in the conduct of the business of Sub 1 or Sub 2 are owned by any Affiliate of Sub 1 or Sub 2 or subject to any license or similar arrangement allowing use thereof by an Affiliate. Seller has not willfully and intentionally made an improper allocation of any intercompany services and charges by Seller to Sub 1 or Sub 2 for the period covered by the Most Recent Financial Statements nor has Seller willfully and intentionally changed the method of allocation between fiscal year 1998 and the Most Recent Financial Statements, wherein the failure to make the proper allocation or the making of such change, (individually or in the aggregate) would have a Material Adverse Effect on Eckler; provided, however, that Buyer acknowledges that certain intercompany services and charges have been identified by Buyer, its Affiliates and their respective advisors and agents (including without limitation, Sun Capital Partners, Inc. and Grant Thornton LLP, C.P.A.), including without limitation, those listed on Schedule 4(z), or have been provided to, or brought to the attention of, one or more of such parties, by Seller, its Affiliates and their respective advisors and agents (including, without limitation, BDO Seidman LLP and Stephens Inc.), also as set forth on Schedule 4(z) ("Identified Intercompany Services and Charges"), and Buyer acknowledges and agrees that the Identified Intercompany Services and Charges will not be deemed to have been improperly allocated or changed (as such changes are specifically set forth on Schedule 4(z)) for purposes of this Section 4(z). (aa) PRODUCT WARRANTIES, DEFECTS AND LIABILITIES. Except as set forth in Section 4(aa) of the Disclosure Schedule, each product manufactured, sold, leased, or delivered by Sub 1 or Sub 2 has been in conformity in all material respects with all applicable federal, state, local or foreign laws and regulations, contractual commitments and all express and implied warranties, except where a failure to conform, singly or in the aggregate, would not have a Material Adverse Effect, and, to Seller's Knowledge, neither Sub 1 nor Sub 2 has any liability for replacement or repair thereof or other damages in connection therewith, except for liabilities incurred in the Ordinary Course of Business. Other than guaranties, warranties and 25 indemnities granted in the Ordinary Course of Business (which guarantees, warranties and indemnities would not, individually or in the aggregate, have a Material Adverse Effect), no product manufactured, sold, leased or delivered by Sub 1 or Sub 2 is subject to any guaranty, warranty, or other indemnity beyond their standard terms and conditions of sale or lease for such products. To Seller's Knowledge, neither Sub 1 nor Sub 2 has any material liability arising out of any injury to individuals or property as a result of the ownership, possession or use of any product manufactured, sold, leased, or delivered by Sub 1 or Sub 2 and, to the Knowledge of Seller, there has been no inquiry or investigation made in respect thereof by any Person. (bb) INVENTORIES. Except as disclosed in Section 4(bb) of the Disclosure Schedule, the inventories of the Companies as reflected on the Most Recent Financial Statements consist only of items in good condition and salable or usable in the Ordinary Course of Business except to the extent of the inventory reserve included on the Most Recent Financial Statements, which reserve is adequate for such purpose, and are recorded on such balance sheet in accordance with GAAP applied in a manner consistent with past practices and experience with respect to the time required to sell slow-moving inventory. (cc) PRICES; FINANCIAL CONDITION. To Seller's Knowledge, (i) since the date of the Most Recent Financial Statements, there have been no changes in the pricing of products purchased by Sub 1 or Sub 2, other than in the Ordinary Course of Business and (ii) there have not been any changes in the financial condition of any supplier of Sub 1 or Sub 2, which, individually or in the aggregate, would have a Material Adverse Effect. (dd) DISCLOSURE. No representation or warranty by Seller or the Companies contained in this Agreement or the Disclosure Schedule, and no statement contained in any document, list, certificate or other writing furnished or to be furnished by or on behalf of Seller, to Buyer or any of its representatives in connection with the transactions contemplated hereby, and no statement or other information concerning the Companies contained in the annual report on Form 10-K dated December 31, 1998 and the quarterly report on Form 10-Q dated June 30, 1999 filed by Seller with the Securities and Exchange Commission, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. 5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. (a) GENERAL. Each of the Parties will use its reasonable best efforts to take all action and to do all things necessary in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Section 7 below). 26 (b) NOTICES AND CONSENTS. Seller will cause the Companies to give all notices to third parties, unless notice is otherwise waived by Buyer, and will cause the Companies to use their reasonable efforts to obtain all third-party consents, that are required to consummate the transactions contemplated hereby. Buyer and/or Seller, as applicable, will (and Seller will cause the Companies to) give any notices to, make any filings with, and use its reasonable efforts to obtain any authorizations, consents and approvals of governments and governmental agencies in connection with the matters referred to in Section 3(a)(ii), Section 3(b)(ii), Section 4(c) and Section 5(g) hereof. Without limiting the generality of the foregoing, each of the Parties will file (and Seller will cause the Companies to file) any Notification and Report Forms and related material that they may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Act, will use their reasonable efforts to obtain (and Seller will cause the Companies to use their reasonable efforts to obtain) a waiver from the applicable waiting period, and will make (and Seller will cause the Companies to make) any further filings pursuant thereto that may be necessary in connection therewith. (c) CONDUCT OF BUSINESS. From the date of this Agreement to the Closing, (a) Seller will cause each of Sub 1 and Sub 2 to conduct its business only in the ordinary course and consistent with past practice, and (b) all intercompany transactions between Seller, on the one hand, and Sub 1 or Sub 2, on the other hand, will be effected only in the Ordinary Course of Business, and will be paid in full prior to the Closing. Without limiting the generality of the foregoing, and except as otherwise expressly provided in this Agreement or consented to in writing by Buyer, from the date of this Agreement to the Closing, Seller will, with respect to Sub 1 and Sub 2, and will cause each of Sub 1 and Sub 2 to: (i) maintain its properties and equipment in substantially the same operating condition and repair as in effect on the date hereof; (ii) continue all existing policies of insurance in full force and effect and at least at such levels as are in effect on the date hereof, up to and including the Closing, and not cancel any such insurance or take or fail to take any action that would enable the insurers under such policies to avoid liability for claims arising out of occurrences prior to the Closing; (iii) not enter into any transaction or make or enter into any material contract or commitment, or terminate or amend any material contract or commitment, except in the Ordinary Course of Business, or enter into any contract or commitment with any officer, director, shareholder, consultant or Affiliate, except as contemplated by this Agreement; (iv) use reasonable efforts to preserve its business organization and its current relationships with its employees, suppliers, customers, distributors, advertisers, subscribers and others having business relationships with it and to keep available to Sub 1 and Sub 2 the services of their employees; 27 (v) not grant any increase in the compensation payable to any officer or other employee of Sub 1 or Sub 2, and not contribute or make any commitment to, or representation that it will, contribute any amounts to any Employee Benefit Plan, or adopt any new Employee Benefit Plan; (vi) maintain its books, accounts and records in the Ordinary Course of Business; (vii) not incur any obligation or liability, whether absolute, fixed or contingent, except in the Ordinary Course of Business; (viii) not issue any capital stock, or any rights, options or warrants to acquire any capital stock, or declare, set aside or pay any dividend or distribution in respect of any of its capital stock, or redeem, purchase or otherwise acquire any of its capital stock; (ix) not terminate, discontinue, close or dispose of any facility; (x) not make any capital expenditures or any commitments for capital expenditures that individually exceed $50,000 or in the aggregate exceed $100,000 except as set forth in Section 5(c)(viii) of the Disclosure Schedule; (xi) not transfer, lease or otherwise dispose of any property or assets except in the Ordinary Course of Business; (xii) not pay, discharge or satisfy any claim, lien, encumbrance, obligation or liability (whether absolute, accrued, contingent or otherwise and whether due or to become due) other than in the Ordinary Course of Business; (xiii) not permit any of its properties or assets (real, personal or mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien, encumbrance, restriction or charge of any kind, except those in effect on the date of this Agreement; (xiv) not cancel any debts or waive any claims or rights of substantial value; (xv) not reduce the quality or quantity of services provided to customers or change the prices of any of its products or services except in the Ordinary Course of Business; (xvi) not make any loans, advances or capital contributions to, or investments in, any Person, except loans and advances to employees in the Ordinary Course of Business; or (xvii) not take any action that would result in any of the representations or warranties of Seller set forth in this Agreement becoming untrue or cause any of the conditions to the Closing set forth in Section 7 to not be satisfied. 28 (d) FULL ACCESS. Seller will permit, and Seller will cause the Companies to permit, representatives of Buyer to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Companies, to all premises, properties, personnel, books, records (including tax records), contracts and documents of or pertaining to the Companies. Buyer will treat and hold as such any Confidential Information it receives from Seller, and the Companies, in the course of the reviews contemplated by this Section 5(d), will not use any of the Confidential Information except in connection with this Agreement and, if this Agreement is terminated for any reason whatsoever, will return to Seller and the Companies all tangible embodiments (and all copies) of the Confidential Information which are in its possession. No such investigation by Buyer or its representatives will affect any of Sellers' representations and warranties in this Agreement; PROVIDED, HOWEVER, that Buyer affirms that the representation and warranty contained in Section 3(b)(viii) of this Agreement is true and correct. (e) NOTICE OF DEVELOPMENTS. (i) Seller may elect at any time to notify Buyer of any development causing a breach of any of the representations and warranties of the Companies in Section 4 above. Unless Buyer has the right to terminate this Agreement pursuant to Section 9(a)(ii) below by reason of the development and exercises that right within the period of 10 business days referred to in Section 9(a)(ii) below, the written notice pursuant to this Section 5(e)(i) will be deemed to have amended the Disclosure Schedule, to have qualified the representations and warranties contained in Section 4 above, and to have cured any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of the development. (ii) Parent, Buyer and Seller will give prompt written notice to the others of any material adverse development causing a breach of any of its representations and warranties in Section 3 above. No disclosure by Parent, Buyer or Seller pursuant to this Section 5(e), however, will be deemed to amend or supplement the Disclosure Schedule or to prevent or cure any misrepresentation or breach of warranty. (f) EXCLUSIVITY. Seller will not, and will not authorize any officer, director, employee or agent of Seller or the Companies to, or authorize any investment banker, attorney, accountant or other representative retained by Seller or any Affiliate of Seller to (and Seller will not cause or permit the Companies to), directly or indirectly, solicit offers for sale or negotiate or discuss a possible merger, sale or restructuring, refinancing or other disposition of all or any material part of the Companies, their assets or capital stock with any other potential purchaser, nor provide any information to any other potential purchaser regarding the Companies in that connection until the Closing. Seller will promptly advise Buyer of any offer, solicitation or request for information received by it from any Person, including the identity of the Person making such offer, solicitation or request and the nature and terms (if any) of any such offer, solicitation or request. 29 (g) ENVIRONMENTAL MATTERS. (i) Seller will take all reasonable actions necessary to continue in full force and effect all existing permits issued to Sub 1 or Sub 2, and, with Buyer's prior approval, review and consent, to apply for any permits, and/or file or submit any notices or registration statements, needed or expected to be needed to enable the businesses of Sub 1 or Sub 2 to continue in normal operation after Closing, including, without limitation, any transfers of existing permits and/or any filings necessary for existing permits to remain in full force and effect notwithstanding the transaction contemplated by this Agreement. (ii) Seller will provide, or will cause the Companies to provide, to Buyer: (A) the originals, or, if not available, copies, of any applications, statements, or reports filed or given by or with respect to Sub 1 or Sub 2 with or to the EPA, any state department of environmental regulations, or any similar department of environmental regulations, or any similar state or local regulatory body, authority, or agency in the past five years; (B) the originals, or, if not available, copies, of any governmental permits, authorizations or approvals for Seller or Sub 1 or Sub 2 and/or their operations issued in the past five years; and (C) all reports and documentation of Sub 1 and Sub 2 (whether or not generated internally) concerning past waste disposal and compliance with waste disposal regulations (hazardous or otherwise). 6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the period following the Closing. (a) GENERAL. In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 8 below). Promptly following Closing, Seller will take all actions necessary to transfer to Buyer, for no additional consideration, (i) a Ford F150 truck (VIN# 1FTEF15NBTLA98681) and (ii) three Router Com Super Stack II-Netbuilder (model# 3C8224C), free and clear of all liens or other encumbrances. (b) LITIGATION SUPPORT. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Companies, each of the other Parties will cooperate with it and its counsel in the defense or 30 contest, make available their personnel, and provide such testimony and access to their books and records as will be necessary in connection with the defense or contest, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Section 8 below). (c) TRANSITION. Seller will not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier or other business associate of the Companies from maintaining the same business relationships with the Companies after the Closing as it maintained with the Companies prior to the Closing. (d) GUARANTEES. Buyer will use reasonable efforts to assist Seller to secure the release of Seller from all guarantees entered into by Seller or its Affiliates on behalf of Sub 1 or Sub 2 under letters of credit, loans, guarantees, leases, including all equipment and real property leases, mortgages or other similar arrangements which guarantees are set forth in Section 6(d) of the Disclosure Schedule (the "Guaranteed Obligations"); provided that Buyer will not be required to pay money or incur any expenses in connection therewith. (e) COMPETITION. (i) Seller acknowledges that Buyer would be irreparably damaged if Seller's confidential knowledge of the business of Sub 1 or Sub 2 (the "Business") were disclosed to or utilized on behalf of any Person that is in competition with Sub 1 or Sub 2. Accordingly, Seller will not, and will cause its Affiliates not to, at any time, without the prior written consent of Buyer, disclose or use any such Confidential Information. For purposes hereof, Confidential Information will not include information that is approved in writing for release by Buyer or Parent, is generally known by the recipient prior to its disclosure to the recipient, is received by a recipient from a third party rightfully in possession of such information or is otherwise required by law to be disclosed. (ii) In furtherance of this Section 6(e) and to secure the interests of Buyer hereunder, Seller will not, and will not permit any of its Affiliates to, directly or indirectly, participate in the ownership, management, operation or control of, or have any financial interest in or assist any person in the conduct of, any business (a "Competitive Operation") that competes with the Business as conducted by Sub 1 and Sub 2, respectively, at any time during the two-year period immediately preceding the date of this Agreement in any area where the Business is then conducted; PROVIDED, HOWEVER, that ownership of note more than one percent of the equity securities of any publicly held Competitive Operation will not constitute a violation of this paragraph (ii). (iii) Seller acknowledges that a violation by it or any of its Affiliates of any of the covenants contained in this Section 6(e) would cause immeasurable and irreparable damage to Buyer. Seller accordingly acknowledges that Buyer will be entitled to injunctive relief in any court of competent jurisdiction for any actual or threatened violation of any covenant, without posting a bond or other security, in addition to any other remedies available to Buyer. 31 (f) TRADEMARKS. Seller will cooperate with Buyer and take all action reasonably requested by Buyer to transfer and assign to Buyer all rights of Seller, Sub 1 or Sub 2 in the trademarks referred to in the Assignment of Trademarks attached hereto as EXHIBIT E, including without limitation filing such documents and other materials with the U.S. Patent and Trademark Office and other governmental and regulatory agencies as may be necessary to effect such transfer and assignment. (g) NAME CHANGE OF SELLER'S SUBSIDIARY. Seller will change the name of its wholly owned subsidiary "Eckler Corvette Sales, Inc." so as to remove the name "Eckler" on or prior to the Closing Date. 7. CONDITIONS TO OBLIGATION TO CLOSE. (a) CONDITIONS TO OBLIGATION OF BUYER AND PARENT. The obligations of Buyer and Parent to consummate the transactions contemplated by this Agreement are subject to satisfaction at or before the Closing of the following conditions: (i) the representations and warranties set forth in Section 3(a) and Section 4 above and the statements contained in any schedule, amended schedule, instrument, list, certificate or writing delivered by Seller or the Companies pursuant to this Agreement, that are qualified as to materiality will be true and correct as of the date when made and as of the Closing Date as if made at and as of the Closing Date and each of such representations, warranties and statements that are not so qualified will be true and correct in all material respects as of the date when made and as of the Closing Date as if made at and as of the Closing Date (except, in each case, for those representations, warranties and statements that address matters only as of a particular date, in which case they will be true and correct, or true and correct in all material respects, as applicable, as of such date); (ii) Seller will have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) There will not be instituted or pending any suit, action, investigation, inquiry or other proceeding by or before any court or governmental or other regulatory or administrative agency or commission requesting or looking toward an order, judgment or decree that (a) restrains or prohibits the consummation of any of the transactions contemplated hereby, (b) would reasonably be expected to have a Material Adverse Effect on Buyer's ability to exercise control over or manage the Companies after the Closing or (c) would reasonably be expected to have a Material Adverse Effect. (iv) no statute, rule, regulation, executive order, decree or injunction will have been enacted, entered, promulgated or enforced by any court or governmental authority that prohibits the consummation of any of the transactions contemplated hereby; 32 (v) all Licenses, consents, approvals and authorizations of all third parties and governmental and regulatory authorities will have been obtained that are necessary except as set forth on Schedule 7(a)(v) of the Disclosure Schedule , in the opinion of counsel to Buyer, in connection with (a) the execution and delivery by Seller and the Companies of this Agreement, (b) the consummation by Seller and the Companies of the transactions contemplated hereby and (c) the ownership and operation by Buyer of the Companies, and copies of all such Licenses and consents, approvals and authorizations will have been delivered to Buyer; (vi) from the date of this Agreement through the Closing Date, there will not have occurred any change in the financial condition, business or operations of Sub 1 or Sub 2 that would be reasonably likely to have a Material Adverse Effect; (vii) Seller will have delivered to Buyer a certificate to the effect that each of the conditions specified above in Section 7(a)(i)-(vi) is satisfied in all respects; (viii) all actions to be taken by Seller and the Companies in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Buyer; (ix) as of the Closing Date, none of the Companies will have any indebtedness for borrowed money or obligations in respect of any such indebtedness, including indebtedness to Seller or any of its Affiliates, except for a $315,000 letter of credit required under the General Motors Service Parts Operations License Agreement or as set forth in Section 7(a)(ix) of the Disclosure Schedule; (x) at the Closing, Seller will have entered into a ten-year lease agreement in the form of EXHIBIT F for Buildings Two and Three at Seller's headquarters in Titusville, Florida; (xi) at the Closing, Buyer and Seller will enter into a Transition Services Agreement substantially in the form of EXHIBIT G hereto; (xii) Buyer will have received from Morgan, Lewis & Bockius LLP, counsel to Seller, an opinion in form and substance as set forth in EXHIBIT H attached hereto, addressed to Buyer and dated as of the Closing Date; (xiii) all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act (if applicable) will have expired or otherwise been terminated and the Parties and the Companies will have received all other authorizations, consents and approvals of the governmental or regulatory bodies or authorities referred to in Section 3(a)(ii), Section 3(b)(ii) and Section 4(c); 33 (xiv) Seller will have delivered to Buyer an executed counterpart of the Assignment of Trademarks, in the form attached hereto as EXHIBIT E; (xv) Seller will have secured the release of Sub 1 and Sub 2 from all guarantees entered into by Sub 1 or Sub 2 on behalf of Seller or its Affiliates under all Guaranteed Obligations set forth on Section 6(d) of the Disclosure Schedule unless waived by the Buyer in writing. Buyer and Parent may waive any condition specified in this Section 7(a) if it executes a writing so stating at or prior to the Closing. (b) CONDITIONS TO OBLIGATION OF SELLER AND THE COMPANIES. The obligation of Seller and the Companies to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) the representations and warranties set forth in Section 3(b) above and the statements contained in any schedule, amended schedule, instrument, list, certificate or writing delivered by Buyer or Parent pursuant to this Agreement, that are qualified as to materiality will be true and correct as of the date when made and as of the Closing Date as if made at and as of the Closing Date and each of such representations, warranties and statements that are not so qualified will be true and correct in all material respects as of the date when made and as of the Closing Date as if made at and as of the Closing Date (except, in each case, for those representations, warranties and statements that address matters only as of a particular date, in which case they will be true and correct, or true and correct in all material respects, as applicable, as of such date); (ii) Buyer and Parent will have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) there will not be instituted or pending any suit, action, investigation, inquiry or other proceeding by or before any court or governmental or other regulatory or administrative agency or commission requesting or looking toward an order, judgment or decree that (a) restrains or prohibits the consummation of any of the transactions contemplated hereby, (b) would reasonably be expected to have a Material Adverse Effect on Buyer's or Parent's ability to exercise control over or manage the Companies after the Closing or (c) would reasonably be expected to have a Material Adverse Effect; (iv) no statute, rule, regulation, executive order, decree or injunction will have been enacted, entered, promulgated or enforced by any court or governmental authority that prohibits the consummation of any of the transactions contemplated hereby; 23 (v) Buyer and Parent will have delivered to Seller a certificate to the effect that each of the conditions specified above in Section 7(b)(i)-(iv) is satisfied in all respects; (vi) all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act (if applicable) will have expired or otherwise been terminated and the Parties and the Companies will have received all other authorizations, consents and approvals of governmental or regulatory bodies or authorities referred to in Section 3(a)(ii), Section 3(b)(ii) and Section 4(c), above; (vii) all actions to be taken by Buyer and Parent in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Seller; (viii) at the Closing, Buyer will have entered into a ten-year lease agreement in the form of EXHIBIT D for Buildings Two and Three at Seller's headquarters in Titusville, Florida; (ix) Seller will have received the Closing Payment; (x) at the Closing, Buyer and Seller will enter into a Transition Services Agreement substantially in the form of EXHIBIT G hereto; and (xi) Seller will have received from counsel to Buyer an opinion in form and substance as set forth in EXHIBIT I attached hereto, addressed to Seller and dated as of the Closing Date. Seller may waive any condition specified in this Section 7(b) if it executes a writing so stating at or prior to the Closing. 8. REMEDIES FOR BREACHES OF THIS AGREEMENT. (a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and warranties of Seller contained in Section 4 above will survive the Closing hereunder (unless Buyer or Parent knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect for a period of one year thereafter. All of the representations and warranties of the Parties contained in Section 3 above will survive the Closing (unless the damaged Party or Party's agents (including, without limitation, in the case of Buyer, Sun Capital Partners, Inc.) knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect for the applicable statutes of limitations. 35 (b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. (i) In the event (A) either Seller or the Companies breaches any of its representations, warranties and covenants contained herein (other than the covenants in Section 2(a) above and the representations and warranties in Section 3(a) above which are covered by paragraph (ii) below), and, if there is an applicable survival period pursuant to Section 8(a) above, (B) any claim is asserted against Buyer or any Affiliate with respect to any Taxes relating to Seller's, Sub 1's or Sub 2's operations or properties on or prior to the Closing Date, (C) any Taxes that may be due from Seller directly and solely as a result of the sale of the stock of the Companies pursuant to this Agreement, provided that Buyer or Parent makes a written claim for indemnification against Seller within such survival period, (D) any liability or obligation relating to events prior to the Closing with regard to any Employee Benefit Plan, unless otherwise accrued or provided for in the July 1999 Financial Statements, or as otherwise provided in this Agreement, (E) any liability arising out of products sold by Sub 1 or Sub 2 prior to the Closing Date, unless otherwise accrued or provided for in the July 1999 Financial Statements, or as otherwise provided in this Agreement, (F) any violation by Seller, Sub 1 or Sub 2 of any Environmental Law or (G) any claims, lawsuits, injunctions or other actions brought or threatened by any Person against any of Sub 1, Sub 2, Buyer or any of Buyer's Affiliates based on a claim by any Person of a right to acquire Sub 1 or Sub 2 from Seller, then Seller agrees to indemnify Buyer from and against any Adverse Consequences Buyer will suffer through and after the date of the claim for indemnification caused proximately by the breach; PROVIDED, HOWEVER, that Seller will not have any obligation to indemnify Buyer or Parent from and against any Adverse Consequences caused by (A) through (G) above (except Adverse Consequences relating to Taxes or Employee Benefit Plans): (x) until Buyer or Parent has suffered Adverse Consequences by reason of all such breaches in excess of a $100,000 aggregate deductible (the "Indemnification Threshold") (after which point Seller will be obligated only to indemnify Buyer or Parent from and against further such Adverse Consequences, that is, for amounts greater than $100,000) or thereafter (y) to the extent the Adverse Consequences Buyer has suffered by reason of all such breaches exceeds a $10,250,000 aggregate ceiling (after which point Seller will have no obligation to indemnify Buyer from and against further such Adverse Consequences). (ii) In the event either Seller or the Companies breaches any of its covenants in Section 2(a) above or any of its representations and warranties in Section 3(a) above, and, if there is an applicable survival period pursuant to Section 8(a) above, provided that Buyer or Parent makes a written claim for indemnification against Seller within such survival period, then Seller agrees to indemnify Buyer or Parent from and against the entirety of any Adverse Consequences Buyer or Parent will suffer through and after the date of the claim for indemnification caused proximately by the breach. (c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. In the event either Buyer or Parent breaches any of its representations, warranties and covenants contained herein, and, if there is an applicable survival period pursuant to Section 8(a) above, provided that Seller makes a written claim for indemnification against Buyer or Parent pursuant to Section 10(g) below 36 within such survival period, then Buyer or Parent agrees to indemnify Seller from and against the entirety of any Adverse Consequences Seller will suffer through and after the date of the claim for indemnification caused proximately by the breach. (d) MATTERS INVOLVING THIRD PARTIES. (i) If any third party will notify any Party (the "Indemnified Party") with respect to any matter (a "Third-Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Section 8, then the Indemnified Party will promptly (and in any event within 10 business days after receiving notice of the Third-Party Claim) notify each Indemnifying Party thereof in writing. (ii) Any Indemnifying Party will have the right to assume and thereafter conduct the defense of the Third-Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party; PROVIDED, HOWEVER, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably) unless the judgment or proposed settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the Indemnified Party. (iii) Unless and until an Indemnifying Party assumes the defense of the Third-Party Claim as provided in Section 8(d)(ii) above, however, the Indemnified Party may defend against the Third-Party Claim in any manner it reasonably may deem appropriate. (iv) In no event will the Indemnified Party consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of each of the Indemnifying Parties (not to be withheld unreasonably). (e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties will make appropriate adjustments for tax benefits and insurance coverage in determining the amount of Adverse Consequences actually incurred by a party for purposes of this Section 8. To the extent that utilization of tax benefits, insurance coverage or indemnification payments reduces the amount of Adverse Consequences actually incurred by Buyer or Parent, such Adverse Consequences will not be counted against the Indemnification Threshold. All indemnification payments under this Section 8 will be deemed adjustments to the Merger Consideration. (f) OTHER INDEMNIFICATION PROVISIONS. The indemnification provisions in this Section 8 are in addition to, and not in derogation of, any statutory, equitable or common law remedy any Party may have for breach of representation, warranty or covenant; PROVIDED, HOWEVER, that Buyer and Parent acknowledge and agree that the foregoing indemnification provisions in this Section 8 will be the exclusive remedy of Buyer for any breach of the representations and warranties in Section 4 above. 37 9. TERMINATION. (a) TERMINATION OF AGREEMENT. This Agreement may be terminated as provided below: (i) The Parties may terminate this Agreement by mutual written consent at any time prior to the Closing; (ii) Buyer and Parent may terminate this Agreement by giving written notice to Seller at any time prior to the Closing in the event (A) Seller has within the then previous 10 business days given Buyer or Parent any notice pursuant to Section 5(e)(i) above and (B) the development that is the subject of the notice has had a Material Adverse Effect; (iii) Buyer and Parent may terminate this Agreement by giving written notice to Seller at any time prior to the Closing (A) in the event either Seller or the Companies has breached any material representation, warranty or covenant contained in this Agreement in any material respect, either Buyer or Parent has notified Seller of the breach, and the breach has continued without cure for a period of 15 days after the notice of breach or (B) if the Closing will not have occurred on or before August 31, 1999, by reason of the failure of any condition precedent under Section 7(a) hereof which is not otherwise waived by Buyer (unless the failure results primarily from either Buyer or Parent itself breaching any representation, warranty or covenant contained in this Agreement); and (iv) Seller and the Companies may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing (A) in the event either Buyer or Parent has breached any material representation, warranty or covenant contained in this Agreement in any material respect, Seller has notified Buyer of the breach, and the breach has continued without cure for a period of 15 days after the notice of breach or (B) if the Closing will not have occurred on or before August 31, 1999, by reason of the failure of any condition precedent under Section 7(b) hereof which is otherwise waived by Seller (unless the failure results primarily from either Seller or the Companies breaching any representation, warranty or covenant contained in this Agreement, in which event such date will be extended until such breach is cured). (b) EFFECT OF TERMINATION. If any Party terminates this Agreement pursuant to Section 9(a) above, all rights and obligations of the Parties hereunder will terminate without any liability of any Party to any other Party (except for any liability of any Party then in breach); PROVIDED, HOWEVER, that the confidentiality provisions contained in Section 5(d) above will survive termination. 38 10. TAX INDEMNIFICATION. Notwithstanding anything to the contrary contained in Section 8 of this Agreement: (a) TAX SHARING AND INDEMNIFICATION. Seller will indemnify, defend and hold harmless Buyer from and against any and all Taxes that may be imposed on or assessed against or otherwise claimed to be due from Buyer with respect to any of the Companies or Tax Affiliate, or the assets of any such Company or its Tax Affiliates (A) with respect to taxable periods ending on or prior to the Closing Date; (B) with respect to any and all Taxes of any member of a consolidated, combined or unitary group of which any of the Companies or any predecessor thereof is or was a member (other than a Company) on or prior to the Closing Date, by reason of the liability of such Company pursuant to Treasury Regulation Section 1.1502-6(a) or any analogous or similar state, local or foreign law or regulation; (C) arising by reason of any breach by Seller of the representations, warranties and covenants contained in Section 4(k); (D) by reason of being a successor-in-interest or transferee of another entity on or prior to the Closing Date; (E) with respect to any and all Taxes allocated to Seller pursuant to Section 10(c) hereof; and (F) arising from an election or deemed election imposed by a taxing authority under Section 338 (h)(10) of the Code (or any comparable provision of state, local or foreign law) with respect to the purchase of the Sub 1 Shares and Sub 2 Shares. Seller will also pay or cause to be paid and will indemnify and hold harmless Buyer, each Company and their Tax Affiliates from and against (x) any liability arising under any Tax sharing, Tax indemnity, Tax allocation or similar agreement (whether or not written) to which any of the Companies or any predecessor or transferor with respect thereto is a party or is bound ("Tax Sharing Payments") and (y) all losses, damages and reasonable third party costs and expenses (including reasonable attorney, accountant and expert witness fees) ("Related Costs") incurred in connection with the Taxes or Tax Sharing Payments for which Seller indemnifies Buyer, each Company and their Tax Affiliates pursuant to this Section 10(a) (or any asserted deficiency, claim, demand or assessment, including the defense or settlement thereof relating to such Taxes or Tax Sharing Payments) or the enforcement of this Section 10(a). (b) Buyer will be responsible for, and will pay or cause to be paid, and will indemnify and hold harmless Seller from and against, any and all Taxes that may be imposed on or assessed against a Company (i) with respect to taxable periods of the Company beginning after the Closing Date and (ii) with respect to any and all Taxes allocated to Buyer pursuant to Section 10(c) hereof. Buyer will also pay or cause to be paid and will indemnify and hold harmless Seller from and against all Related Costs of Seller incurred in connection with the Taxes for which Buyer indemnifies Seller pursuant to this Section 10(b) (or any asserted deficiency, claim, demand or assessment, including the settlement thereof, relating to such Taxes) or the enforcement of this Section 10(b). (c) (i) Taxes, attributable to any taxable period of any of the Companies beginning before and ending after the Closing Date hereof will be allocated (A) to Seller for the portion of the period up to and including the Closing Date, and (B) to Buyer (or such Company) for the portion of the period subsequent to the Closing Date. 39 (ii) For purposes of this Section 10(c), Taxes for the period up to and including the Closing Date, ("Seller's Taxes"), will be determined on the basis of an interim closing of the books as of the end of the Closing Date, PROVIDED, HOWEVER, that in the case of a franchise tax not based on income, such Seller's Taxes will be equal to the amount of franchise tax for the taxable year multiplied by a fraction, the numerator of which will be the number of days from the beginning of the taxable year through the Closing Date, as the case may be, and the denominator of which will be the number of days in the taxable year. (d) (i) Except as otherwise specifically provided herein, Seller will be responsible for filing or causing to be filed all Tax Returns required to be filed by or on behalf of any of the Companies or their assets or operations for taxable periods ending on or before the Closing Date including extensions, and Buyer will be responsible for filing or causing to be filed all other Tax Returns required to be filed by or on behalf of any of the Companies or their assets or operations for taxable periods ending after the Closing Date including extensions. (ii) With respect to any Tax Returns of any of the Companies required to be filed by Seller as set forth in clause (i) above for taxable periods ending on or before the Closing Date, at least 15 days prior to the due date for filing of such Tax Returns (including extensions), Seller will provide Buyer with copies of such Tax Return for Buyer's approval (which approval will not be unreasonably withheld). (iii) With respect to any Tax Returns of any of the Companies required to be filed by Buyer after the Closing Date that include any period before the Closing Date, if any, at least 15 days prior to the due date for filing of such Tax Return, (including extensions), Buyer will provide Seller with copies of such Tax Return for Seller's approval (which approval will not be unreasonably withheld), together with a statement setting forth the amount of Tax shown due thereon that is allocable to Seller pursuant to Section 10(c) hereof (the "Statement"). Not later that five days before the due date for payment of Taxes with respect to such Tax Return, Seller will pay to Buyer an amount equal to the Taxes shown on the Statement as being allocable to Seller pursuant to Section 10(c) hereof. No payment pursuant to this Section 10(d)(iii) will excuse Seller from its indemnification obligations pursuant to Section 10(a) hereof should the amount of Taxes as ultimately determined (on audit or otherwise), for the periods covered by such Tax Return and which are the responsibility of Seller, exceed the amount of Seller's payment under this Section 10(d)(iii). (iv) Any dispute with respect to any Tax Return referred to in this Section 10(d)(iv) will be resolved by the independent accounting firm referred to in Section 10(h) hereof. 40 (e) Seller and Buyer will cooperate fully with each other and make available to each other in a timely fashion such tax data and other information as may be reasonably required for the preparation of any Tax Returns required to be prepared and filed by Buyer hereunder. Seller and Buyer will make available to the other, as reasonably requested, all information, records or documents in their possession relating to Tax liabilities of each Company for all taxable periods of such Company ending on, prior to or including the Closing Date and will preserve all such information, records and documents until the expiration of any applicable Tax statute of limitations or extensions thereof; PROVIDED, HOWEVER, that in the event a proceeding has been instituted for which the information, records or documents is required prior to the expiration of the applicable statute of limitations such information, records or documents will be retained until there is a final determination with respect to such proceeding. (f) Buyer and Seller will promptly notify each other in writing upon receipt by Buyer, any of the Companies or Seller, as the case may be, of any notice of any Tax audits of or assessments against any of the Companies for taxable periods of such Company ending on, prior to or including the Closing Date. Seller will have the right to represent such Company's interests in any Tax audit or administrative or court proceeding (a "Tax Proceeding") relating to taxable periods of such Company ending on or prior to the Closing Date and to employ counsel of its choice at its expense; PROVIDED, HOWEVER, that Seller may not agree to a settlement or compromise thereof without the prior consent of Buyer, if such settlement or compromise could be expected to have an adverse effect on such Company, Buyer or its Tax Affiliates with respect to Taxes or taxable periods for which Buyer is responsible hereunder. Buyer will have the right, at its expense, to represent a Company's interests in any Tax Proceeding relating to any taxable period ending after the Closing Date. Buyer and Seller each agree that they will cooperate fully with each other and their respective counsel in the defense against or compromise of any claim in any Tax Proceeding. (g) Seller and Buyer agree that any payment made under Sections 8 and 10 will be treated by the parties on their Tax Returns as an adjustment to the aggregate consideration for the Sub 1 Shares and Sub 2 Shares. If, notwithstanding such treatment by the parties, any indemnity payment is determined to be taxable to the indemnified party by any taxing authority, the indemnifying party will also indemnify the indemnified party for any Taxes and Related Costs payable by the indemnified party by reason of the receipt of such indemnity payment. (h) Any dispute as to any matter covered under this Section 10 will be resolved by an independent accounting firm mutually acceptable to Seller and Buyer. The fees and expenses of such accounting firm will be borne equally by the parties. 41 11. MISCELLANEOUS. (a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party will issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of Buyer and Seller; PROVIDED, HOWEVER, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use its reasonable best efforts to afford the other Parties the opportunity to review and comment upon the disclosure prior to the making thereof). (b) NO THIRD-PARTY BENEFICIARIES. This Agreement will not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. (c) ENTIRE AGREEMENT. This Agreement (including the documents referred to herein and the schedules and exhibits attached hereto) and the documents delivered pursuant hereto constitute the entire agreement between the Parties and supersede any prior understandings, agreements, including the letter of intent dated April 27, 1999, between Seller and an Affiliate of Buyer, or representations by or between the Parties, written or oral, to the extent they have related in any way to the subject matter hereof. (d) SUCCESSION AND ASSIGNMENT. This Agreement will be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of Buyer and Seller; PROVIDED, HOWEVER, that Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates, (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer nonetheless will remain responsible for the performance of all of its obligations hereunder) and (iii) assign all of its rights hereunder to Deutsche Financial Services Corporation and its assigns in the instance of default under the Loan and Security Agreement by and between Deutsche Financial Services Corporation and Buyer dated August 23, 1999. (e) COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. (f) HEADINGS. The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement. (g) NOTICES. All notices, requests, demands, claims and other communications hereunder will be in writing. Any notice, request, demand, claim or other communication hereunder will be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below, or if sent by facsimile transmission, on the date of receipt by the recipient: 42 If to Seller: Smart Choice Automotive Group, Inc. 5200 South Washington Avenue Titusville, Florida 32780-7316 Fax: 407-264-0376 Attn: Gary R. Smith, President and Chief Executive Officer copy to: Morgan, Lewis & Bockius LLP 5300 First Union Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2339 Fax: 305-579-0321 Attn: Martin T. Schrier, Esq. If to Buyer or Parent: Eckler Industries, LLC c/o Sun Capital Partners, Inc. 5355 Town Center Road, Suite 802 Boca Raton, Florida 33486 Fax: 561-394-0540 Attn: Marc J. Leder and Rodger R. Krouse copy to: Klehr, Harrison, Harney, Branzburg & Ellers LLP 260 S. Broad Street Philadelphia, Pennsylvania 19102 Fax: 215-568-6603 Attn: Robert W. Cleveland, Esq. Any Party may send any notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. (h) GOVERNING LAW. This Agreement will be governed by and construed in accordance with the domestic laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida. (i) WAIVER OF JURY TRIAL. To the extent not prohibited by applicable law which cannot be waived, each of the Parties hereby waives and covenants that it will not assert (whether as plaintiff, defendant or otherwise) any right to trial by jury in any forum in respect of any issue or action arising out of or based upon this Agreement or any other document or agreement entered into in connection herewith or the subject matter hereof or thereof or in any way 43 connected with or related or incidental to the transactions contemplated hereby or thereby, in each case whether now existing or hereafter arising. Each Party acknowledges that it has been informed by the other Party that this Section 11(i) constitutes a material inducement upon which such other Party is relying and will rely in entering into this Agreement and any other agreements relating hereto or contemplated hereby. Either party hereto may file an original counterpart or a copy of this Section 11(i) with any court as written evidence of the consent of each Party to the waiver of its right to trial by jury. (j) AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement will be valid unless the same will be in writing and signed by Buyer and Seller. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (k) SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. (l) EXPENSES. Except as set forth in Section 4(d) and 9(c), each of Buyer and Seller will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. (m) CONSTRUCTION. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" will mean including without limitation. (n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and the Disclosure Schedule identified in this Agreement are incorporated herein by reference and made a part hereof. ***** 44 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written. SMART CHOICE AUTOMOTIVE ECKLER INDUSTRIES, INC. GROUP, INC. By /s/ ROBERT J. DOWNING By /s/ ROBERT J. DOWNING ------------------------------ ----------------------------- Name: Robert J. Downing Name: Robert J. Downing Title: Vice President Title: Vice President ECKLER INDUSTRIES, LLC ECKLER'S RACING BODIES, INC. By /s/ RODGER R. KRAUSE By /s/ ROBERT J. DOWNING ------------------------------ ----------------------------- Name: Rodger R. Krause Name: Robert J. Downing Title: Vice President Title: Vice President SUN AUTOMOTIVE PARTNERS, L.P. By: Sun Automotive Advisers, Inc. By /s/ RODGER R. KRAUSE ------------------------------ Name: Rodger R. Krause Title: Vice President EX-10.92 3 EXHIBIT 10.92 LEASE AGREEMENT ---------- SMART CHOICE AUTOMOTIVE GROUP, INC., LANDLORD, and ECKLER INDUSTRIES, LLC TENANT PREMISES: Buildings Two and Three, 5130 and 5140 South Washington Avenue, Titusville, Florida TABLE OF CONTENTS PAGE ARTICLE I....................................................................-1- 1.1 Demise and Premises........................................-1- 1.2 Use of Building One........................................-2- 1.3 Encumbrances...............................................-3- 1.4 Term.......................................................-3- 1.5 Renewal Options............................................-4- ARTICLE II - RENT............................................................-5- 2.1 Basic Rent.................................................-5- 2.2 Additional Rent............................................-5- 2.3 Net Rent...................................................-6- 2.4 Interest on Rent...........................................-6- 2.5 Method of Payment..........................................-6- 2.6 Additional Rent............................................-6- ARTICLE III - USE............................................................-7- 3.1 Use........................................................-7- ARTICLE IV - TAXES; UTILITIES................................................-7- 4.1 Taxes Payable by Tenant....................................-7- 4.2 Installment Payments.......................................-8- 4.3 Proration..................................................-8- 4.4 Contests...................................................-8- 4.5 Taxes Not Payable by Tenant...............................-10- 4.6 Evidence of Payment.......................................-10- 4.7 Forwarding of Bills.......................................-11- 4.8 Utility Charges...........................................-11- ARTICLE V - ALTERATIONS ....................................................-12- 5.1 Changes, Alterations and Additional Construction..........-12- 5.2 Manner of Construction....................................-13- 5.3 Title to Alterations......................................-13- ARTICLE VI - SURRENDER......................................................-14- 6.1 Delivery of Possession....................................-14- 6.2 Removal of Personal Property..............................-15- 6.3 Retention of Personal Property............................-15- -i- ARTICLE VII - INSURANCE ....................................................-16- 7.1 Property Insurance........................................-16- 7.2 Liability Insurance.......................................-16- 7.3 Flood Insurance...........................................-17- 7.4 General Requirements......................................-17- 7.5 Accidents.................................................-19- 7.6 Proof of Loss.............................................-19- 7.7 Restoration...............................................-19- ARTICLE VIII - PERFORMANCE OF TENANT'S AGREEMENTS...........................-20- 8.1 Performance of Tenant's Agreements........................-20- ARTICLE IX - REPAIRS AND MAINTENANCE .......................................-20- 9.1 Repair of Premises........................................-20- 9.2 No Obligation of Landlord to Make Repairs.................-21- 9.3 Commission of Waste.......................................-21- ARTICLE X - COMPLIANCE WITH LAWS, ORDINANCES, ETC...........................-21- 10.1 Compliance with Laws......................................-22- 10.2 Compliance with Insurance Requirements....................-22- 10.3 Compliance with Restrictions..............................-22- 10.4 Contest by Tenant.........................................-23- 10.5 Permits...................................................-23- ARTICLE XI - MECHANICS' LIENS ..............................................-23- 11.1 Mechanics' Liens..........................................-23- ARTICLE XII - INSPECTION OF PREMISES BY LANDLORD............................-24- 12.1 Inspection of Premises by Landlord........................-24- ARTICLE XIII - INDEMNIFICATION OF LANDLORD .................................-25- 13.1 Indemnification of Landlord...............................-25- ARTICLE XIV - TENANT'S ACCEPTANCE OF CONDITION OF PREMISES..................-25- 14.1 Tenant's Acceptance.......................................-25- ARTICLE XV - DEFAULT BY TENANT..............................................-26- 15.1 Event of Default..........................................-26- 15.2 Multiple Defaults.........................................-27- 15.3 Landlord's Remedies for Tenant's Default..................-27- 15.4 Miscellaneous Default Provisions..........................-31- ARTICLE XVI - DAMAGE AND DESTRUCTION........................................-32- 16.1 Damage by Fire, etc.......................................-32- -ii- 16.2 Restoration...............................................-33- 16.3 No Abatement of Rent......................................-33- 16.4 ..........................................................-34- ARTICLE XVII - CONDEMNATION.................................................-34- 17.1 Total Taking..............................................-34- 17.2 Award on Total Taking.....................................-34- 17.3 Partial Taking............................................-34- 17.4 Reconstruction............................................-35- 17.5 Award on Partial Taking...................................-35- 17.6 Settlement Agreement......................................-35- 17.7 Abatement in Basic Rent...................................-36- ARTICLE XVIII -ASSIGNMENT, SUBLETTING AND MORTGAGING........................-36- 18.1 Voluntary Assignment or Other Transfer of Lease...........-36- ARTICLE XIX - TENANT'S WORK.................................................-38- 19.1 Tenant's Work.............................................-38- ARTICLE XX - NOTICES........................................................-38- 20.1 Notices...................................................-38- ARTICLE XXI - QUIET ENJOYMENT...............................................-39- 21.1 Quiet Enjoyment...........................................-39- ARTICLE XXII - TENANT'S ESTOPPEL CERTIFICATES...............................-39- 22.1 Estoppel Certificates.....................................-39- ARTICLE XXIII - LEASE NOT SUBJECT TO TERMINATION............................-40- 23.1 Lease with First Mortgagee................................-40- ARTICLE XXIV - ENVIRONMENTAL MATTERS........................................-40- 24.1 Compliance With Laws......................................-40- 24.2 Permits...................................................-41- 24.3 Site Contamination........................................-41- 24.4 Indemnification; Limitation of Liability..................-42- 24.5 Tenant's Covenants........................................-43- ARTICLE XXV - MISCELLANEOUS PROVISIONS......................................-43- 25.1 Integration...............................................-43- 25.2 No Recording..............................................-43- 25.3 Time of the Essence.......................................-43- 25.4 No Partnership............................................-43- 25.5 Severability..............................................-43- 25.6 Authority.................................................-44- -iii- 25.7 Governing Law.............................................-44- 25.8 Counterparts..............................................-44- 25.9 Headings; Pronouns........................................-44- 25.10 Limitation of Landlord's Liability........................-45- 25.11 Survival..................................................-45- 25.12 Waiver of Subrogation.....................................-45- 25.13 Signs.....................................................-46- 25.14 Parking...................................................-46- 25.15 Brokers...................................................-48- 25.16 Prevailing Party..........................................-48- 25.17 Effect of Conveyance or Assignment by Landlord............-48- 25.18 Radon Disclosure..........................................-49- 25.19 Landlord's Default........................................-49- 25.20 Memorandum of Lease.......................................-49- 25.21 Landlord's Lien Waiver....................................-50- 25.22 Survey....................................................-50- -iv- SCHEDULE OF EXHIBITS: EXHIBIT "A" - THE PREMISES EXHIBIT "A-1" - ACCESS EASEMENT EXHIBIT "B" - INTENTIONALLY OMITTED EXHIBIT "C" - DESCRIPTION OF INTERIM SPACE EXHIBIT "D" - TAX PARCELS EXHIBIT "E" - COVENANTS, RESTRICTIONS AND OTHER MATTERS AFFECTING THE PREMISES EXHIBIT "F" - TENANT WORK LETTER EXHIBIT "G" - TENANT PARKING AREAS EXHIBIT "H" - FORM OF WAIVER OF LANDLORD'S LIEN -v- LEASE AGREEMENT This Lease Agreement ("LEASE") is entered into as of this _______ day of August, 1999, by and between Smart Choice Automotive Group, Inc. ("LANDLORD"), and Eckler Industries, LLC ("TENANT"). Landlord and Tenant, each intending to be legally bound, hereby mutually covenant and agree as follows: ARTICLE I - DEMISE, PREMISES, TERM I.1 DEMISE AND PREMISES. Landlord hereby demises and lets unto Tenant, and Tenant hereby leases and takes from Landlord, for the Term and upon the covenants, terms and conditions hereinafter set forth, all those certain tracts or parcels of land located at 5130 and 5140 South Washington Avenue, Titusville, Florida, consisting of Parcels 1, 2 (less the easement access area shown on Exhibit "A-1"), 5 and a portion of Parcel 4 and Parcel 6 in the areas designated on EXHIBIT "G" (Parcel 4 and Parcel 6 being subject to relocation rights as set forth in Section 25.14 hereof), Buildings Two and Three, and all walkways, parking lots, driveways, utility facilities, structures and other improvements located thereon and all rights, privileges and easements (including without limitation, the easement for access described in EXHIBIT "A-1" attached hereto and made a part hereof) appurtenant thereto (the "Premises"). The Premises is described on EXHIBIT "A" attached hereto and made a part hereof (excluding Parcel 4 and Parcel 6 which are only shown on EXHIBIT "G"). Together with all those fixtures and building machinery and equipment which are now located in or on the Premises (collectively, "FIXTURES"); and all furniture, furnishings, trade fixtures and other personal property now located on or in the Premises, (collectively, "Personalty"); and such other rights and privileges as currently exist for the benefit, use and operation of Building Two and Building Three for storm water runoff to the retention pond (as shown on Exhibit "D"), provided, however, Landlord shall have the right to relocate such rights and privileges so long as Landlord provides alternative rights and privileges of the same utility in all material respects. I.2 USE OF BUILDING ONE. During the interim period required for the construction of the Tenant's Work in Building Three described in this Lease and the Tenant's Work Letter, Landlord demises and lets unto Tenant and Tenant leases from Landlord the space located in Building One, as more particularly shown on EXHIBIT "C" attached hereto, consisting of approximately 9,000 square feet of space and the shared use with Landlord of the computer room located on the second floor of Building One (the "Interim Space"). The Interim Space shall also include the right to use the parking areas adjacent to Building One with respect to employees occupying the Interim Space and the customers of Tenant, and the right to come upon, through, on and across the Landlord's property, including Building One, to access the Interim Space. Tenant will vacate the Interim Space upon the earlier to occur of (i) March 1, 2000 or (ii) fifteen (15) days after the completion of the Tenant's Work; provided, however, Tenant may extend the term of the Interim Space for three additional consecutive months up until May 31, 2000 so long as Tenant pays Landlord rent for such months in the amounts of $2,000.00 for March, $3,000.00 for April and $4,000.00 for May to the extent that Tenant exercises its right to extend for such month (unless such extension is due to a force majeure event in which event rent shall be as stated below). Notwithstanding anything to the contrary contained in this Paragraph 1.2, Tenant's obligation to vacate the Interim Space on the dates provided above shall be subject -2- to force majeure events not to exceed one hundred eighty (180) days. If Tenant extends the term of the Interim Space past March 1, 2000 due to a force majeure event, notwithstanding the provisions above, Tenant shall pay Landlord rent for such extended months at the rent of $2,000 per month. Any partial month during the extended term of the Interim Space shall be prorated. Tenant will not pay Rent or other charges with respect to Tenant's use of the Interim Space, except as above set forth and as stated in Sections 4 and 5 of the Transition Services Agreement between Landlord and Tenant of even date herewith. I.3 ENCUMBRANCES. This Lease and Tenant's leasehold estate hereunder are subject to all applicable laws, ordinances and regulations and the matters set forth on EXHIBIT "E" attached hereto and made a part hereof. Landlord shall cause each existing and future mortgagee to execute and deliver to the Tenant for execution such mortgagee's standard form of subordination, attornment and non-disturbance agreement providing, INTER ALIA, that conditioned upon there being no Event of Default, this Lease shall not be terminated by such mortgagee and Tenant's rights under this Lease, including possession, shall continue. Tenant, as a condition to the effect of such covenant of non-disturbance shall execute and deliver each such mortgagee's standard form of subordination, attornment and non-disturbance agreement. I.4 TERM. The term of this Lease ("TERM") shall commence 12:01 A.M. on the date hereof ("COMMENCEMENT DATE"), and shall end at 11:59 p.m. on September 30, 2009 ("EXPIRATION DATE") unless sooner terminated as herein provided. As used herein, "LEASE YEAR" means each consecutive twelve calendar month period beginning with the Commencement Date, except that if the Commencement Date is not the first day of a calendar month, then the first -3- Lease Year shall also include the days during the Term occurring before the first day of the first calendar month following the Commencement Date. I.5 RENEWAL OPTIONS. Provided no Event of Default shall have occurred and remain, Tenant shall have the option, for two (2) additional terms, to extend the term of this Lease. The first renewal period being five (5) years (the right to exercise same shall hereinafter be referred to as the "FIRST RENEWAL TERM"), which right shall be exercisable by Tenant giving written notice thereof to Landlord at least 180 days prior to the end of the tenth Lease Year. The second renewal period being equal to five (5) years (the right to exercise same shall hereinafter be referred to as the "SECOND RENEWAL TERM"), which right shall be exercisable by Tenant only after Tenant exercised its option for the First Renewal Term in accordance with this Section 1.5 and by giving written notice to Landlord at least 180 days prior to the end of the First Renewal Term. Both the First and Second Renewal Terms shall be on the same terms and provisions as set forth herein, except that Landlord will provide no improvement allowance, there shall be no Interim Space, there shall be no additional renewal rights, and the Basic Rent for each year during each of the renewal terms shall, in each instance, be increased to equal to the product of the Basic Rent for the Lease Year preceding each such year, multiplied by a fraction, the denominator of which shall be the published CPI Index (hereinafter defined) figure for the month immediately preceding the first month of the Term (i.e., July, 1999) and numerator of which shall be the published CPI Index figure for the month immediately preceding the first month of the preceding Lease Year. For purposes of this Lease, "CPI Index" means the Consumer Price Index, all Urban Consumers, All Items (1982 - 84=100) for Brevard County, as published by the Bureau of -4- Labor Statistics of the United States Department of Labor (or the Index published by such Bureau closest to Brevard County if no index is published for Brevard County), or, if the foregoing index is no longer published, then a comparable measure of the purchasing power of the United States Dollar as published by an agency of the United States government and designated by Landlord. ARTICLE II - RENT II.1 BASIC RENT. Tenant shall pay to Landlord beginning on the Commencement Date, for ten (10) years, an annual basic rent ("BASIC RENT") of $130,000, in equal monthly installments of $10,833.33, plus all applicable sales taxes. Each such monthly installment of Basic Rent shall be payable in advance on the first day of each month during the Term, the first such installment to be paid on the Commencement Date, provided, however, if the Commencement Date is not the first day of a calendar month, then the Basic Rent for the calendar month in which the Commencement Date occurs shall be prorated on the basis of the portion of such month which occurs during the Term, which prorated amount shall be paid on the Commencement Date. II.2 ADDITIONAL RENT. From and after the Commencement Date, and throughout the Term of this Lease, Tenant shall pay as additional rent ("ADDITIONAL RENT", the Basic Rent and Additional Rent, and each installment and increment thereof, are sometimes herein collectively called "RENT") all additional (i.e., in addition to the Basic Rent) sums, costs, expenses and other payments which Tenant in any of the provisions of this Lease assumes or agrees to pay or discharge, and, in the event of any non-payment thereof, Landlord shall have all the rights and remedies provided for herein or by law or in equity in the case of non-payment of rent. -5- II.3 NET RENT. It is intended that the provisions of this Lease shall require Tenant to pay all real estate taxes, special and general assessments, insurance premiums, and the maintenance and repair costs and expenses relating to the Premises as expressly provided in Article 9. It is intended that (a) Landlord shall incur no cost or expense with respect to the Premises during the Term, except as otherwise expressly provided in this Lease and (b) the Basic Rent shall be an absolute net return to Landlord throughout the Term of this Lease, without offset or deduction and free of all expenses, charges, diminution and other deductions whatsoever, except as otherwise expressly provided in this Lease. II.4 INTEREST ON RENT. Any Rent not paid within five (5) days after due shall bear interest at the annual rate equal to the prime rate, as published in the WALL STREET JOURNAL plus two per cent (2%) ("DEFAULT Rate") from its due date until the date of payment. II.5 METHOD OF PAYMENT. All Rent shall be paid at Landlord's office specified in Section 20.1, or to such other person and/or at such other place as shall be designated by Landlord to Tenant. All Rent shall be paid by Tenant without offset, deduction or demand, except as otherwise expressly provided for herein. II.6 ADDITIONAL RENT. All amounts other than Basic Rent which Tenant is obligated to pay to Landlord or any other party as required by this Lease and such sums that Tenant is required to pay to Landlord under Section 2(g) of the Merger Agreement (as hereinafter defined), if any, as determined under Section 2(g), shall constitute additional rent ("Additional Rent"). ARTICLE III - USE III.1 USE. The Premises may be used solely for the purpose of showroom, offices, sales, warehouse, manufacturing and activities relating to such uses, in each instance in -6- accordance with Governmental Regulations (as hereinafter defined), and for no other purpose. "Governmental Regulations" shall mean all present and future laws, statutes, ordinances, orders, rules, regulations and requirements of any federal, state or municipal government, agency, department, commission, board or officer having jurisdiction, foreseen or unforeseen, ordinary or extraordinary, which shall be applicable to the Premises, or any part thereof, or to the use or manner of use of the Premises thereof by any of the occupants thereof. ARTICLE IV - TAXES; UTILITIES IV.1 TAXES PAYABLE BY TENANT. Tenant shall pay (except as hereinafter provided in Section 4.05) all taxes, general and special assessments, excises, levies, license and permit fees and other governmental charges, general or special, ordinary or extraordinary, unforeseen or foreseen, of any kind and nature whatsoever (including without limitation all penalties and interest thereon, except as otherwise provided in Section 4.7 hereof) which at any time during the Term may be assessed, levied, imposed upon, or grow or become due and payable out of or in respect of, the Premises or any part thereof, which, for the purposes of this Article IV shall mean to include Parcels 1, 2 and 5, Tenant's pro rata share of Taxes on Parcel 4 which shall be calculated by multiplying the Tax on Parcel 4 by a percentage in which the numerator is the number of parking spaces on Parcel 4 leased to Tenant and the denominator is the number of total parking spaces on Parcel 4, and Tenant's pro rata share of Taxes on other parcels that it leases which shall be calculated by multiplying the Tax on such parcel by a percentage in which the numerator is the square footage of the land that Tenant uses and the denominator is the square footage of the land of such parcel or the use or occupancy thereof, including without limitation, sales taxes and amounts of whatever nature assessed in lieu of sales taxes, or which at -7- any time during the Term hereof may become a lien on the Premises or any part thereof (all of the foregoing are sometimes herein collectively called "TAXES"). IV.2 INSTALLMENT PAYMENTS. If, by law, any Tax, at the option of the taxpayer, may be paid in installments, Tenant may exercise the option to pay the same in installments and, in such event, Tenant shall pay such installments and all interest which shall accrue on the unpaid balance of such Tax as it becomes due. In addition, all installments of any such Tax and all interest thereon which are payable after the end of the Term shall be deposited, prior to the end of the Term, by Tenant with Landlord for such payment. IV.3 PRORATION. Any Tax assessed on the basis of a fiscal or tax period of the relevant taxing authority, a part of which period is included within the Term and a part of which falls before the Term or after the Term, shall be prorated between Landlord and Tenant so that Tenant shall pay such proportion of said Tax as applies to Term, and Landlord shall pay the remainder thereof. If Landlord fails to pay any Tax required under this Paragraph, Tenant shall have the right to pay any such Tax ten (10) business days after notice to Landlord. IV.4 CONTESTS. Tenant shall have the right to contest, at Tenant's sole cost and expense, the amount or validity, in whole or in part, of any Tax, by appropriate proceedings diligently conducted by Tenant in good faith, but only after payment of the amount of such Tax into an escrow account acceptable to Landlord, in which event Tenant may postpone or defer payment of such Tax if the right or privilege so to do is granted or sanctioned by applicable law and if the Premises shall not, by reason of such postponement or deferment, be subject or liable to lien, forfeiture or loss, and if Tenant shall promptly commence proceedings for such contest and prosecute the same with all due diligence and dispatch. Upon the termination of such -8- proceedings, Tenant shall pay such amount of any such Tax or part thereof as is finally determined in such proceedings, the payment of which, pursuant to the foregoing provisions of this Section, shall have been deferred during the prosecution of such proceedings, together with all costs, fees, interest, penalties and other liabilities in connection therewith. If Tenant fails to maintain in escrow an amount equal to all of the Taxes, penalties and interest due, alleged to be due by the taxing authority and accruing or the Term of this Lease shall be terminated or expire during the course of such proceedings, and if Tenant, pursuant to the foregoing provisions, shall have deferred payment of the contested Tax, then, unless Landlord shall instruct Tenant otherwise, Tenant shall, prior to such termination or expiration, duly terminate such proceedings and pay to the appropriate taxing authorities the full amount of such Tax and all interest and penalties attributable to such deferred payment. Upon request by Tenant, Landlord, subject to the reasonable approval of Landlord's counsel, shall execute and deliver any and all such documents or instruments and take any and all such other action as shall be necessary or proper to permit Tenant to bring such proceedings in Tenant's name or otherwise to facilitate the conduct of such proceedings by Tenant. Tenant shall, within ten days after Landlord's demand, reimburse Landlord for all costs and expenses (including, without limitation, counsel fees) incurred by Landlord in connection with any such proceedings. Tenant shall defend, indemnify and save Landlord harmless from all other liability, costs and expenses incurred in connection with any such proceedings. Any refunds of Taxes paid by Tenant resulting from such contest by Tenant and attributable to any period occurring during the Term shall be payable to Tenant. IV.5 TAXES NOT PAYABLE BY TENANT. Nothing herein contained shall be construed to require Tenant to pay (a) any income, gross receipts, profits or similar tax assessed on or in -9- respect of the general income of Landlord, (b) any corporation, capital levy or other franchise, license, excise, mercantile or similar tax assessed against or payable by Landlord other than with respect to the use or occupancy of the Premises; (c) any gift, inheritance or estate, tax assessed or imposed against or payable by Landlord, or (d) any tax attributable to Landlord's transfer of the property comprising the Premises or any tax relating to any property other than the Premises; except that, if, subsequent to the date of this Lease, any tax shall be levied, assessed or imposed upon or be required to be paid by Landlord as a substitute for one or more of the taxes otherwise required hereby to be paid by Tenant, or Landlord shall be required by any governmental authority to pay any additional tax with respect to Landlord's ownership of the Premises (other than those excluded above), the execution and delivery of this Lease, or the receipt or accrual of any Rent or other sum payable to Landlord under the provisions of this Lease, the same shall, to the extent of such substitution, be deemed to be a Tax payable by Tenant hereunder. IV.6 EVIDENCE OF PAYMENT. Tenant shall furnish to Landlord for inspection no later than ten business days before the date when any Tax would become delinquent, a photocopy of the official receipt of the appropriate taxing authority, or, in lieu thereof, other proof satisfactory to Landlord evidencing payment of such Tax. IV.7 FORWARDING OF BILLS. Landlord shall, promptly upon receipt of a bill for any Tax, or notice of assessment, or notice of increase, or other change therein, forward the same to Tenant, but Tenant's nonreceipt thereof shall not excuse Tenant from the timely payment of any Tax which Tenant is obligated to pay hereunder or otherwise relieve Tenant of Tenant's liabilities and duties hereunder, provided, however, Landlord shall be responsible to pay any penalties and interest assessed upon or levied by such taxing authorities. Tenant and Landlord shall make -10- arrangements with the taxing authorities for the transmission of bills and notices simultaneously to Landlord and Tenant. IV.8 UTILITY CHARGES. Tenant shall pay, before any interest or penalty shall accrue thereon, all water and sewer rentals and charges and all charges for gas, electricity, telephone and communication services and other utility services used, rendered or consumed by Tenant upon the Premises during the Term hereof. Landlord represents and warrants that Building Three and Building Two are separately metered for gas and electricity and other utilities except water. Landlord agrees to promptly install separate meters for water usage relating to Building Two and Building Three and the cost of such installation shall be shared equally by Landlord and Tenant. Landlord and Tenant shall pay for their respective share of all water, sewer and other utility charges that may be billed to Tenant or Landlord prior to the time that Building Three and Building Two are separately metered. Subject to causes beyond the control of Landlord, Landlord will maintain or cause to be maintained utility pipes, conduits and similar equipment which is located on (and only to the extent so located) on Landlord's property other than the Premises and which serves the Premises. To the extent such choice does not conflict or otherwise impair Landlord's ability to freely choose Landlord's utility provider(s), Tenant may choose Tenant's utility provider(s). ARTICLE V - ALTERATIONS V.1 CHANGES, ALTERATIONS AND ADDITIONAL CONSTRUCTION. Tenant shall not construct any (a) additional building or improvement on the Premises (I.E., in addition to the improvements existing on the date hereof), or (b) change, alteration or addition in or to the Premises except for (i) those set forth on EXHIBIT "F" attached hereto and made a part hereof, and (ii) interior -11- changes, alterations and additions or such other changes, alterations and additions which are less than $25,000.00 and which do not affect the foundation, load-bearing walls, roof, structure or exterior of the Building or the Building's plumbing, waste disposal, fire protection, heating, ventilating, air conditioning or mechanical systems (all of which Tenant shall be permitted to make without Landlord's approval, but with prior notice to Landlord), or (c) wall, fence, exterior lighting facility, driveway, roadway, parking area (except those areas shown on EXHIBIT "G") on the Premises (any and all of the foregoing being herein collectively called an "ALTERATION"), unless and until, in each instance (except as aforesaid with respect to permitted changes), Tenant shall have submitted to Landlord plans, specifications and other materials as Landlord may reasonably request, and Landlord shall have approved same. Such approval by Landlord shall not be unreasonably withheld, conditioned or delayed. Subject to the provisions of Paragraph 5.2 below, Landlord hereby approves Tenant's right (i) to alter the fire wall located in Building Three to allow for additional office and call center space, and (ii) to construct, at Tenant's sole expense, parking areas in the space designated by Landlord in accordance with Paragraph 25.14 hereof. V.2 MANNER OF CONSTRUCTION. (A) All Alterations shall be constructed by Tenant, without expense to Landlord, in a good, first class and workmanlike manner, employing new materials of first class quality, and in compliance with the plans and specifications therefor and all applicable permits, Governmental Regulations and in compliance with the terms and conditions of this Lease. (B) Prior to the commencement of construction of any Alteration costing in excess of $100,000, Tenant shall deliver to Landlord a contractor's performance and labor -12- material payment bond, with corporate surety, in form reasonably satisfactory to Landlord, covering all contractors, subcontractors, materialmen and other persons who might be entitled to file a mechanics' lien, naming Landlord and Tenant, and no other person, as co-obligees, conditioned on completion of the Alteration in accordance with the Landlord-approved plans therefor and the provisions of this Lease, and the payment of the costs of labor and materials to be employed in connection therewith, free and clear of all mechanics' and other liens. (C) Promptly upon the completion of construction of each Alteration, which on an individual or cumulative basis cost more than $50,000, Tenant shall deliver to Landlord one complete set of "as built" drawings thereof. V.3 TITLE TO ALTERATIONS. Except to the extent otherwise expressly provided herein, upon the expiration of this Lease such Alteration shall automatically be deemed part of the Premises for purposes of this Lease. Notwithstanding the foregoing, upon any termination of this Lease or Tenant's right of possession of the Premises, at Landlord's option, (a) prior to such expiration or termination, all such Alterations, or any part or parts thereof designated by Landlord except those with respect to Tenant's Work and the parking areas constructed by Tenant, shall be removed from the Premises and the Premises restored substantially to their condition immediately prior to the construction thereof, all at Tenant's expense, or (b) upon such expiration or termination, title to such Alterations, or any part or parts thereof designated by Landlord, in the condition in which Tenant is obliged to maintain the Alterations pursuant to the provisions of this Lease, shall automatically pass to, vest in and belong to Landlord without further action on the part of either party and without cost or charge to Landlord. -13- ARTICLE VI - SURRENDER VI.1 DELIVERY OF POSSESSION. Tenant shall, on the Expiration Date of the Term, or upon any earlier termination of this Lease, or upon any termination of Tenant's right to possess the Premises pursuant to the provisions of this Lease, well and truly surrender and deliver up the Premises into the possession and use of Landlord without delay and in the condition in which Tenant has herein agreed to maintain them, reasonable wear and tear, casualty and condemnation excepted, broom clean and free and clear of all lettings, occupancies, liens and encumbrances, other than those existing immediately prior to the commencement of the Term. If Tenant holds over in the Premises after the expiration of the Term or any earlier termination of this Lease or of Tenant's right to possess the Premises, then, at Landlord's option, and without limitation to any right or remedy of Landlord with respect to such holding over, Tenant shall be a Tenant at sufferance and shall pay Landlord Basic Rent for the period of the hold over in an amount equal to one hundred fifty percent (150%) of the Basic Rent in effect immediately prior to such expiration or termination, and Tenant shall be subject to and shall perform all its agreements and obligations, including, without limitation the payment of Additional Rent, under this Lease. Landlord's acceptance of any such Rent and performance during the period of Tenant's holding over shall not waive or otherwise affect any claim, right or remedy which Landlord may have with respect to such holding over and shall not be deemed a consent or agreement to such hold over by Landlord. VI.2 REMOVAL OF PERSONAL PROPERTY. Any and all personal property furnished or installed by or at the expense of Tenant which does not constitute part of the Premises shall be removed by Tenant and all damage to the Premises caused by such removal repaired by Tenant, -14- prior to the expiration or earlier termination of the Term or the termination of Tenant's right to possess the Premises. VI.3 RETENTION OF PERSONAL PROPERTY. Any personal property which shall remain on the Premises after the expiration of the Term or earlier termination of this Lease or Tenant's right to possess the Premises may, at the option of Landlord, be deemed to have been abandoned by Tenant and may be retained by Landlord as Landlord's property or be disposed of, without liability of Landlord, in such manner as Landlord may see fit, or Landlord, at its option, may require Tenant to remove the same at Tenant's expense. In case of such removal, all costs of removal and of repairing any damage to the Premises arising from such removal shall be paid by Tenant upon Landlord's demand. Tenant shall pay to Landlord on demand (a) a reasonable fee for storing and disposing of any such personal property, and (b) all costs and expenses incurred by Landlord in storing and disposing of any such personal property (including, without limitation, counsel fees relating to claims against Landlord by any and all parties claiming interests in such personal property). ARTICLE VII - INSURANCE VII.1 PROPERTY INSURANCE. Tenant shall at all times during the Term keep the Premises insured for the protection of Landlord and Tenant against such risks, and with such coverages, as Landlord shall from time to time reasonably require, which shall be "all-risk" insurance, including without limitation, fire and extended coverage insurance, in an amount not less than the full replacement value (as from time to time reasonably designated by Landlord), with coverage (in addition to the standard coverage afforded by such insurance) for theft, vandalism, malicious mischief, and, if available at commercially reasonable rates, and to the extent -15- requested by Landlord, boiler explosion, and Tenant shall maintain rent loss insurance with respect to the Rent payable for a one-year period. Landlord shall at all times during the term of the Interim Space keep Building One insured in the same manner and with the same coverages as Landlord currently maintains. VII.2 LIABILITY INSURANCE. Tenant, at Tenant's sole cost and expense, shall maintain commercial general liability insurance against any claims for bodily injury, death or property damage, occurring on, in or about the Premises, and on, in or about the Tenant Parking Areas (as hereafter defined), and against contractual liability for any such claims, such insurance to afford minimum protection in the amount of $1,000,000 for bodily injury, personal injury or death to any one person and $2,000,000 for bodily injury, personal injury or death to more than one person and a liability umbrella policy of not less than $4,000,000, in each instance with a deductible amount of not more than $10,000, or in such higher amount as Landlord may deem reasonably necessary and as is customary in the industry. Landlord, and any mortgagee of the Premises designated by Landlord, shall be named as additional insured parties under all such policies. Tenant shall also maintain commercial general liability insurance as provided above with respect to Building One and Tenant's use of the adjacent parking areas used by Tenant and Tenant shall insure Tenant's personal property located in the Interim Space during the term of the Interim Space. VII.3 FLOOD INSURANCE. If, at any time or from time to time, the Premises are located in a designated "flood prone" area pursuant to the Flood Disaster Protection Act of 1973, or any amendment or supplement thereto, then Tenant shall obtain and maintain throughout the Term flood insurance and shall take such other action as may be necessary to comply fully with the -16- National Flood Insurance Program set forth in said Act. Tenant shall comply fully with the National Flood Insurance Act of 1968, as the same may be amended from time to time, and all other laws, orders, rules, ordinances and regulations concerning flood insurance, to the extent applicable to the Premises. VII.4 GENERAL REQUIREMENTS. Without limitation to the foregoing, the following provisions shall apply to each and every policy of insurance which Tenant is hereby required to carry: (a) the form, amount and coverage of each policy, and the insurer under each policy, shall be subject to Landlord's reasonable approval, and Landlord and each of Landlord's mortgagees (after notice of Landlord's mortgagees has been given to Tenant) shall be named as additional insureds, (b) Tenant shall cause each carrier to deliver its certificate of insurance to Landlord and each holder of a mortgage on the Premises, certifying the applicable insurance provisions herein required, (c) within ten days after Landlord's request, Tenant shall deliver to Landlord and any holder of a mortgage on the Premises designated by Landlord an original copy and certificate of each policy, (d) each certificate shall state that the applicable policy has been prepaid by Tenant for a minimum period of one month (or in lieu of such statement, Tenant shall provide Landlord with evidence of such prepayment), and shall require thirty (30) days written notice by the carrier to Landlord any holder of a mortgage on the Premises designated by Landlord prior to any cancellation, expiration, amendment or lapse thereof, (e) no policy shall name a loss payee or beneficiary other than Tenant, Tenant's lenders (with respect only to inventory, fixtures, equipment and personal property, in each instance owned by Tenant (the "Personal Property"), provided the removal of the Personal Property does not require a physical detachment from the realty or cause injury thereto and the Personal Property does not include any furnishings, fixtures -17- or equipment which are or have been affixed to the realty) and Tenant's equipment Landlord(s) only with respect to equipment owned by any such equipment Landlord, and any holder of a mortgage on the Premises designated by Landlord, (f) at least 30 days prior to the expiration of each policy, Tenant shall provide Landlord and any holder of a mortgage on the Premises designated by Landlord with certificates (or copies of policies, if required by Landlord as aforesaid) of renewal or replacement policies, (g) each policy shall be issued by a carrier duly licensed in the state in which the Premises are located, (h) Tenant shall not permit any condition to exist on the Premises, and shall not commit any act or omission, which would wholly or partially invalidate any insurance, (i) if any insurance shall expire, be withdrawn, lapse, become void or unsecure by reason of Tenant's breach of any condition thereof or by reason of the failure or impairment of the capital of any carrier thereof, Tenant shall place new insurance on the Premises, including insurance for the lapse period, which conforms to the insurance requirements herein set forth, and (j) in the event of any default by Tenant with respect to its obligations pertaining to insurance, Landlord, at its option but without being obliged to do so, and in addition to any other rights and remedies Landlord may have on account of such default, shall have the right to cure immediately after giving notice to Tenant of such default (including, without limitation, the right to purchase single interest coverage protecting only the interest of Landlord, the right to make premium payments and the right to cause changes to be made to policies then carried by Tenant), whereupon all costs and expenses incurred by Landlord in curing such default together with interest at the Default Rate from the respective dates of expenditures by Landlord, shall be paid by Tenant on demand. Landlord acknowledges and -18- agrees the insurance coverage maintained by Tenant as of the date hereof is acceptable and approved. VII.5 ACCIDENTS. Upon the occurrence of any accident, injury or personal property casualty in or about the Premises, Tenant shall give immediate notice thereof to Landlord, and shall provide Landlord with evidence that such liability of Landlord relating thereto is covered by the insurance which Tenant is required by this Lease to carry. VII.6 PROOF OF LOSS. In the event of any loss or damage to the Premises, or any part thereof, for which a claim may be rendered against any such policy of insurance, Landlord, at its option (and without limitation to Landlord's rights under the preceding paragraph), may, in the event there exists an Event of Default, submit proof of loss to the appropriate insurer, and may apply for and be named the sole payee for proceeds of any such loss or damage; provided, however, if Landlord obtains such proceeds and fails to transfer such funds to Tenant for use by Tenant to restore, repair and rebuild the Premises, then, in such event, Tenant's obligation to restore shall cease. VII.7 RESTORATION. If the Premises, or any part thereof, are destroyed or damaged by any cause, Tenant shall give immediate notice thereof to Landlord and Tenant shall (except as provided below) promptly restore, repair and rebuild the Premises; provided however, in the case of an uninsurable casualty or event, Tenant shall not be required to restore, repair and rebuild the Premises. Except as otherwise herein provided, Landlord shall make available to Tenant and shall cause its lenders to make available to Tenant all proceeds of insurance actually paid under policies Tenant is hereby required to carry, to the extent necessary to pay the actual costs and expenses of such repair or restoration of the Premises, provided that Landlord shall have the right -19- to elect from time to time: (i) to disburse such proceeds directly to Tenant, or (ii) in the event there exists an Event of Default, to complete or not to complete, at Landlord's option, such repair or restoration itself, using such proceeds for such purpose. ARTICLE VIII - PERFORMANCE OF TENANT'S AGREEMENTS VIII.1 PERFORMANCE OF TENANT'S AGREEMENTS. If Tenant shall at any time fail to observe or perform any of its agreements or obligations under this Lease, and such failure shall continue beyond any default notice and cure period specified herein, if any, then Landlord shall have the right, but not the obligation, in addition to all its other rights and remedies, to observe or perform all or part (as Landlord may elect) of such agreements or obligations on behalf of Tenant, in which event Landlord shall have the right to enter the Premises for such purposes. All reasonable costs and expenses (including without limitation reasonable counsel fees) incurred by Landlord in exercising any of its rights under this Article, together with interest thereon at the Default Rate from the respective dates of Landlord's incurring of such costs or expenses until the date of payment, shall constitute Additional Rent and shall be paid by Tenant to Landlord on demand. ARTICLE IX - REPAIRS AND MAINTENANCE IX.1 REPAIR OF PREMISES. Throughout the Term of this Lease, Tenant, at Tenant's sole cost and expense, shall take good care of the Premises and the Tenant Parking Areas, and shall, subject to reasonable wear and tear, fire, casualty and condemnation, keep the same in good order and condition, maintain, make all necessary repairs thereto, ordinary and extraordinary, interior and exterior, including without limitation, repairs to the plumbing and equipment. Landlord shall make and pay for all replacements to the Premises and all repairs to the -20- foundation, roof, HVAC, structure of buildings and walls; provided however, Tenant shall be responsible for those repairs and replacements caused by Tenant's negligence or intentional misconduct or the failure of Tenant to maintain the Premises as required in this Paragraph 9.1 in which events Tenant shall complete such repairs and replacements at Tenant's sole cost. Landlord shall assign, without recourse, to Tenant any warranties or guaranties, if any, currently existing with respect to the Premises. All repairs made by Tenant shall be substantially equivalent to or better in quality to the original work. IX.2 NO OBLIGATION OF LANDLORD TO MAKE REPAIRS. Except as otherwise expressly stated in this Lease, Landlord shall not be required to furnish any services or facilities or to make any repairs in or to the Premises. Except as otherwise stated in this Lease, Tenant hereby assumes the full and sole responsibility for the condition, operation, repair, maintenance and management of the Premises. Landlord's obligation to repair and/or replace the Premises under this Article IX is limited to the Premises, including the systems and equipment and other improvements as exists on the date of this Lease and the improvements anticipated to be completed under Exhibit "F", but with respect to no other Alterations of any kind made after the date hereof, for which Tenant shall be solely responsible. IX.3 COMMISSION OF WASTE. Tenant shall not cause or permit any waste or damage, disfigurement or injury to any of the Premises or any part or parts thereof. ARTICLE X - COMPLIANCE WITH LAWS, ORDINANCES, ETC. X.1 COMPLIANCE WITH LAWS. Throughout the Term of this Lease, Tenant shall conform to, comply with and take any and all action necessary to avoid or eliminate any violation of all Governmental Regulation which become effective on or after the Commencement -21- Date. Any cost incurred to comply with the foregoing sentence shall be paid and allocated between Landlord and Tenant so that Tenant's share shall be determined by dividing the number of Lease Years (including partial Lease Years) remaining during the Term by the useful life of such improvement, repair or alterations, as determined by GAAP. The Landlord shall pay the difference. Notwithstanding the foregoing, if Tenant exercises its right to elect the First Renewal Term and the Second Renewal Term, prior to the commencement of each such Renewal Term Tenant shall pay to Landlord such additional amounts as would have been due under this Section 10.1 if the foregoing calculation was made to include the additional Lease Years elected by Tenant. Landlord represents that Landlord has received no notice from any governmental authority of violation of Governmental Regulation with respect to the Premises. Landlord shall be responsible for any capital improvements, repairs, alterations or additions required by Governmental Regulation which became effective prior to the Commencement Date. X.2 COMPLIANCE WITH INSURANCE REQUIREMENTS. Tenant shall observe and comply with the requirements of all policies of insurance that Tenant is required hereby to maintain from time to time with respect to the Premises, and all orders, rules and regulations of the Board of Fire Insurance Underwriters (or any other body exercising similar functions) applicable thereto, or any use, manner of use or condition thereof. X.3 COMPLIANCE WITH RESTRICTIONS. Landlord represents that there are no covenants and/or restrictions referred to or set forth in any instrument now of record affecting the Premises or the use thereof except those listed on EXHIBIT "E" attached thereto. Tenant shall observe and comply with the requirements of all covenants and restrictions referred to or set forth in any -22- instrument now of record affecting the Premises or the use thereof set forth in EXHIBIT "E", as long as the same shall at any time during the Term of this Lease be in force and effect. X.4 CONTEST BY TENANT. Tenant shall have the right to contest, by appropriate proceedings diligently conducted good faith, without cost or expense to Landlord, the validity or application of any law, ordinance, order, rule, regulation or requirement of the nature referred to in this Article, provided that the delay in conformance to or compliance with the same, attendant upon and pending the prosecution of such proceedings, shall not subject Landlord to any fine, penalty or criminal liability or render the Premises, or any part thereof, liable to lien, forfeiture or loss. Tenant shall, within ten (10) days after Landlord's demand, reimburse Landlord for all costs and expenses (including, without limitation, counsel fees) incurred by Landlord in connection with any such contest. Tenant shall defend, indemnify and save harmless Landlord from all other liability, costs and expenses incurred in connection with any such contest. X.5 PERMITS. Throughout the Term of this Lease, Tenant, at Tenant's sole cost and expense, shall procure and maintain all permits, licenses and authorizations required for Tenant's use, operation or occupancy of the Premises then being made, and for the lawful and proper operation and maintenance thereof. ARTICLE XI - MECHANICS' LIENS XI.1 MECHANICS' LIENS. Landlord hereby NOTIFIES ALL MECHANICS, MATERIALMEN AND OTHER LIENORS THAT PURSUANT TO F.S. (ss)713.10, ANY LIENS UNDER F.S. CH. 713 SHALL EXTEND TO, AND ONLY TO, THE RIGHT, TITLE AND INTEREST OF THE PERSON WHO CONTRACTS FOR THE IMPROVEMENT IN QUESTION AND THAT NEITHER THE INTEREST OF LANDLORD NOR ANY -23- SUPERIOR INTEREST IN THE DEMISED PREMISES AND ALL OTHER PORTIONS OF THE PREMISES SHALL NOT BE SUBJECT TO LIENS FOR ANY IMPROVEMENTS, SERVICES OR MATERIALS MADE BY, CONTRACTED FOR OR OTHERWISE AUTHORIZED BY TENANT OR BY ANY EMPLOYEE, CONTRACTOR OR AGENT OF TENANT. Tenant agrees that prior to contracting for any improvements, services or materials to be made in or delivered to the Demised Premises, Tenant shall notify the contractor of the foregoing provisions. Tenant further agrees that upon request of Landlord, Tenant shall execute a notice which sets forth the foregoing provisions, which notice may be recorded by Landlord in the public records of the county where the Premises are located. Tenant shall not suffer or permit any mechanic's lien to be filed against the interest of Landlord or Tenant in the Premises by reason of work, services or materials supplied to Tenant, the Premises, or any part thereof. If any such lien shall be filed at any time, Tenant shall promptly, and in any event within thirty (30) days after the filing thereof, cause the same to be discharged of record, provided, if Tenant shall promptly bond such lien with a responsible surety company, Tenant may contest the amount or validity of any such lien by appropriate proceedings, diligently prosecuted, and such contest shall defer for its duration Tenant's duty hereunder to discharge the same. ARTICLE XII - INSPECTION OF PREMISES BY LANDLORD XII.1 INSPECTION OF PREMISES BY LANDLORD. Upon a twenty-four (24) hours prior notice, Tenant shall permit Landlord and the duly authorized representatives of Landlord to enter the Premises, including without limitation the interior of the Premises, at all reasonable times during usual business hours for the purpose of inspecting the same. At Tenant's option, a representative of Tenant may accompany Landlord or Landlord's representative while on the Premises. -24- Notwithstanding the preceding, Landlord may enter the Premises without prior notice or accompaniment in the circumstance of an emergency condition. ARTICLE XIII - INDEMNIFICATION OF LANDLORD XIII.1 INDEMNIFICATION OF LANDLORD. Tenant agrees to defend with counsel reasonably satisfactory to Landlord, indemnify and save harmless Landlord from and against any and all claims, damages, losses, costs and expenses, including without limitation reasonable counsel fees, suffered or incurred by Landlord with respect to: (a) the conduct, operation or management of, or any work, act or thing whatsoever done in, on or about the Premises, (b) any act or forbearance of Tenant or any sublessee or concessionaire of Tenant or any of Tenant's or such sublessee's or concessionaire's agents, contractors, servants, employees, business invitees, licensees, visitors or guests with respect to the Premises, except if caused by Landlord's gross negligence or wilful misconduct, and (c) any accident, injury to or death of any person or damage to any property howsoever caused in or on the Premises except is caused by Landlord's gross negligence or wilful misconduct. ARTICLE XIV - TENANT'S ACCEPTANCE OF CONDITION OF PREMISES XIV.1 TENANT'S ACCEPTANCE. Except as otherwise specifically provided in this Lease, Tenant hereby leases the Premises, and accepts them, "as is", with all faults, in their present condition, as a result of whatever inspecting and testing Tenant deemed necessary, and not as a result of or in reliance upon any representation or warranty of any nature whatsoever by Landlord, or any employee or agent of Landlord. Except with respect to Landlord's obligations under Article IX and X of this Lease, Landlord shall not be liable for any latent or patent defect in the Premises. -25- ARTICLE XV - DEFAULT BY TENANT XV.1 EVENT OF DEFAULT. Each of the following shall constitute an "EVENT OF DEFAULT" by Tenant hereunder: (A) Failure on the part of Tenant to pay the Rent or any other sum of money called for herein when due and the continuation of such failure for three (3) business days, without notice or demand; provided, however, Landlord shall provide Tenant, with respect only to the failure to pay Basic Rent, Additional Rent or any other sums or charges under the Lease, two (2) notices of such failure in any twelve month period and Tenant shall have three (3) business days after notice to cure such default with respect to Basic Rent, Additional Rent or any other sums or charges under the Lease; (B) Failure on the part of Tenant to observe or perform any other covenant, agreement or undertaking of the Tenant contained in this Lease, and the continuation of such failure for thirty (30) days after notice from Landlord, provided however, if such failure cannot be cured within thirty (30) days, Tenant shall not be deemed in default if, within the thirty (30) days after said notice from Landlord, Tenant promptly commences such cure and thereafter diligently and continuously works to complete such cure and such cure has been completed within ninety (90) days after Landlord's original notice of default; (C) If Tenant shall file a voluntary petition in bankruptcy or shall be adjudicated a bankrupt or insolvent, or in any action or proceeding shall file any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future federal or state bankruptcy, reorganization or debt reduction law, or shall seek or consent to or acquiesce in the appointment -26- of any trustee, receiver or liquidator of Tenant or of all or substantially all of Tenant's property or of the Premises; and (D) If within ninety (90) days after the commencement of any proceeding against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, debt adjustment, dissolution or similar relief under any present or future federal or state law, such proceeding shall not have been dismissed; or if, within ninety (90) days after the appointment, without consent or acquiescence of Tenant, of any trustee, receiver or liquidator of Tenant or of all or substantially all of Tenant's property or of the Premises, such appointment shall not have been vacated; or if, within ninety (90) days after the expiration of any such stay, such appointment shall not have been vacated. XV.2 MULTIPLE DEFAULTS. Notwithstanding any contrary provision hereof, Landlord shall not be required to give any notice of default to Tenant (and the foregoing provisions of this Article determining Events of Default shall be deemed to exclude all provisions regarding notice of default) if, on two or more occasions during any period of not more than six (6) months, Tenant shall have defaulted in the observance or performance of any of its agreements or obligations hereunder, and Landlord shall have given Tenant notice of default with respect thereto. XV.3 LANDLORD'S REMEDIES FOR TENANT'S DEFAULT. If any Event of Default shall have occurred, then in addition to all rights and remedies provided by law or equity, or provided for elsewhere in this Lease, Landlord shall have all of the rights and remedies specified in the following paragraphs of this Section. -27- (A) Landlord shall have the right, by notice to Tenant, to accelerate all Base Rent due hereunder and otherwise payable in installments over the remainder of the Term and, at Landlord's option, Additional Rent to the extent that Additional Rent can be determined and calculated to a fixed sum; and the amount of accelerated rent shall be due and payable by Tenant upon Landlord's demand. Additional Rent which has not been included, in whole or in part, in accelerated rent, shall be due and payable by Tenant during the remainder of the Term, in the amounts and at the times otherwise provided for in this Lease. Notwithstanding the foregoing or the application of any rule or law based on election of remedies or otherwise, if Tenant fails to pay the accelerated rent in full when due, Landlord shall have the right to terminate Tenant's further right to possession of the Premises or, as Landlord may elect, to terminate this Lease, as below provided. If Tenant shall tender payment of part but not all of the accelerated rent, then Tenant's failure to make full payment shall be deemed a separate Event of Default hereunder, without any obligation of Landlord to give notice of default and without any opportunity of Tenant to cure such default, and, Landlord shall have the right to refuse to accept same, or to accept same and to apply such partial payment, or portions thereof, to the various obligations and sums owing by Tenant hereunder in such order and priority as Landlord, in its sole discretion, shall determine. (B) Immediately upon the occurrence of an Event of Default or the expiration or sooner termination of the Term, Landlord shall have the right to bar entry into and possession of the Premises by Tenant and by any and all other persons as Landlord, in its discretion, may elect. In addition to the foregoing, Landlord shall have the right, whether or not Landlord elects to terminate this Lease, to recover possession of the Premises, and to that end, Landlord may -28- enter the Premises and take possession, without the necessity of giving Tenant any notice to quit or any other further notice, and with or without (as Landlord may elect) legal process or proceedings, breaking locks and doors if Landlord so chooses, and in so doing, Landlord may remove all or any part of Tenant's property as well as all or any part of the property of others as may be in the Premises. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed of the Premises for any cause, or in the event of Landlord obtaining possession of the Premises, by reason of Tenant committing an Event of Default or otherwise. (C) If, at any time following the occurrence of an Event of Default, Landlord, without terminating this Lease, shall recover or be entitled to recover possession of the Premises, then: (i) Landlord may, but shall not be obliged to, relet the Premises, or any part or parts thereof, and/or, at Landlord's election, demolish or renovate the Improvements and relet the remaining Premises, or any part or parts thereof, on such terms as Landlord may deem desirable, and (ii) Tenant shall continue to be obliged to pay the full Rent reserved by this Lease and to observe and perform all its agreements and obligations hereunder. The failure, refusal or inability of Landlord to relet the Premises or any part or parts thereof shall not release or affect Tenant's liability for such Rent. If Landlord so relets the Premises, then Landlord shall credit against Tenant's continuing obligation to pay Rent, the net rentals actually received by Landlord for such reletting, after first deducting expenses as Landlord may incur in connection with such reletting, including, without limitation, counsel fees and expenses, brokerage fees and commissions, advertising expenses and all costs and expenses of possessing and maintaining the Premises (excluding debt service payments), of demolishing or renovating the Improvements (if, -29- and to the extent, Landlord elects to do so) and of preparing the Premises for reletting. Landlord, in putting the Premises, or any part or parts thereof as Landlord may elect, in good order, or in preparing the same for re-rental, may, at Landlord's option, make such alterations, repairs, replacements, and decorations therein as Landlord, in Landlord's sole judgment, considers advisable, and the making of such alterations, repairs, replacements, and/or decorations shall not operate or be construed to release Tenant from any liability hereunder. Landlord shall in no event be liable in any way whatsoever for failure to relet the Premises, or, in the event that the Premises are relet, for failure to collect the rent under such reletting, and in no event shall Tenant be entitled to receive any excess of such net rents, if any, over the Rent payable by Tenant to Landlord hereunder. No re-entry or reletting of the Premises by Landlord following Tenant's default, and no payment by Tenant of the Rent thereafter, shall constitute a release of any of Tenant's liability hereunder (except to the extent of such payment of Rent) or shall prejudice Landlord's claim for and right to collect from Tenant other sums payable by Tenant hereunder, or Landlord's actual damages with respect to any Event of Default occurring hereunder. (D) At any time following the occurrence of an Event of Default, Landlord may give Tenant notice of Landlord's intention to terminate this Lease on a date specified in such notice, and upon such date, the Term hereof and the estate hereby granted with respect to the Premises shall terminate, without any right of Tenant to redeem same or to prevent such forfeiture, and Tenant shall surrender possession of the Premises to Landlord (except to the extent Tenant shall be obliged to remove Alterations pursuant to ARTICLE V hereof). Upon such termination, Landlord shall be entitled to recover from Tenant in addition to all accrued rental and other sums due from Tenant as of such termination date, damages in an amount equal to: (i) -30- the amount of Rent reserved for the balance of the Term, plus (ii) all costs and expenses incurred by Landlord in doing any and all of the following, to the extent Landlord elects to do so: securing possession of the Premises from Tenant, disposing of any personalty located in the Premises, restoring the Premises to the condition in which Tenant is herein obliged to surrender same to Landlord, preparing and attempting to relet the Premises, maintaining and safeguarding the Premises, renovating the Premises, and recovering said damages from Tenant. Such costs and expenses shall include, without limitation, attorneys' fees and expenses, brokerage fees and expenses, watchmen's wages and insurance premiums, costs of storing or disposing of property left upon the Premises and cleaning and restoration costs. No act or proceeding done or undertaken by Landlord with respect to an Event of Default shall constitute a termination of this Lease by Landlord unless and until Landlord shall give to Tenant the termination notice provided for above. XV.4 MISCELLANEOUS DEFAULT PROVISIONS. (A) The right to enforce all of the provisions of this Lease may, at the option of any assignee of Landlord's rights in this Lease, be exercised by any such assignee, provided that Tenant has had notice of such assignment. (B) Any notation or statement by Tenant on any draft, check or other method of payment of any obligation hereunder, or in any writing accompanying or accomplishing such payment, which notation, or statement purports to impose conditions on such payment or to invoke the doctrine of accord and satisfaction, shall be absolutely void and of no effect, and may be ignored by Landlord. -31- (C) No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. Landlord shall be entitled to injunctive relief in case of the violation, or attempted or threatened violation, of any covenant, agreement, condition or provision of this Lease and to a decree compelling performance of any covenant, agreement, condition or provision of this Lease, or to any other remedy allowed by law or in equity. (D) No failure by Landlord to insist upon the strict performance of any covenant, agreement, term or condition of this Lease on the part of Tenant to be performed, or to exercise any permitted right or remedy consequent upon a default therein, and no acceptance of Tenant's performance or of Tenant's payment of full or partial Rent after such default, shall constitute a waiver by Landlord of such default or of such covenant, agreement, term or condition, or any right or remedy of Landlord with respect thereto. ARTICLE XVI - DAMAGE AND DESTRUCTION XVI.1 DAMAGE BY FIRE, ETC. Subject to Section 7.7 of this Lease, in the event that any of the Improvements shall be damaged or destroyed by fire or any other hazard, risk or casualty whatsoever (such damaged or destroyed Improvements being herein called the "DAMAGED IMPROVEMENTS"), then Tenant shall give immediate notice thereof to Landlord, and shall, as soon as possible, at Tenant's cost and expense, restore, replace and repair the Damaged Improvements regardless of whether insurance proceeds are available to pay all of the cost thereof. Such work by Tenant shall be done pursuant to plans, specifications and a work schedule which shall be subject to Landlord's prior reasonable approval. In the event that more than fifty percent of the -32- floor area of the Improvements is so damaged or destroyed, and such damage or destruction shall occur during the last two years of the Term, then provided all policies of insurance hereby required to be maintained by Tenant are in full force and effect and proper proof of loss shall have been filed thereunder, Landlord and Tenant each shall have the right on or prior to the thirtieth day after the occurrence of such damage or destruction, to terminate this Lease by giving notice to the other respective party. Upon such termination, Tenant shall pay to Landlord (if Landlord has failed to receive such amounts from the proceeds of rent loss insurance required to be carried by Tenant), (a) an amount equal to all Rent which would have been due hereunder for the six month period following such termination, (b) all insurance proceeds theretofore received by Tenant on account of such Damaged Improvements, and (c) assigning to Landlord all insurance policies and unpaid proceeds with respect to the Damaged Improvements. XVI.2 RESTORATION. Subject to Section 7.7 of this Lease, in the event Tenant shall be obliged to restore, repair or replace the Damaged Improvements, then Tenant, regardless of the proceeds of insurance (provided that Tenant has the right to use all of the proceeds from its insurance policies), shall restore or replace the Damaged Improvements as nearly as possible to the condition thereof as they existed prior to such damage or destruction, such restoration or replacement to be begun after the receipt of proceeds of insurance, and continued diligently until completion thereof. XVI.3 NO ABATEMENT OF RENT. No damage to or destruction of any of the Premises as a result of fire or any other hazard, risk or casualty whatsoever shall permit Tenant to surrender this Lease or shall relieve Tenant from Tenant's liability to pay the full Rent payable under this Lease, or from any of Tenant's other obligations hereunder, except to the extent otherwise -33- provided in this Article. Notwithstanding the foregoing, Tenant's obligation to pay rent shall be reduced by the proceeds actually received by Landlord from rent loss insurance policies required to be purchased by Tenant under this Lease. XVI.4 LANDLORD'S MORTGAGEE. Landlord shall cause any mortgagee of Landlord to permit Tenant to use all insurance proceeds to repair, restore and replace the Damaged Improvements. ARTICLE XVII - CONDEMNATION XVII.1 TOTAL TAKING. In the event that the whole of the Premises shall be taken under the exercise of the power of eminent domain or by agreement with any condemnor in lieu of such taking (herein called a "TOTAL TAKING"), then this Lease shall terminate as of the earlier of the date when title thereto vests in the condemnor or the date when possession thereof shall be delivered to the condemnor. XVII.2 AWARD ON TOTAL TAKING. The entire award with respect to any Total Taking shall be paid to Landlord, except that Tenant shall be entitled to any award which the condemnor may make, and which shall be provided for by law, specifically for Tenant's moving expenses and business dislocation damages, provided that same are not deducted from the award otherwise payable to Landlord. XVII.3 PARTIAL TAKING. In the event that any portion or portions of the Premises shall be taken under the exercise of the power of eminent domain or by agreement with any condemnor in lieu of such taking (herein called a "PARTIAL TAKING"), then this Lease, only as to the portion or portions so taken, shall terminate as of the date possession thereof shall be delivered to the condemnor, but otherwise this Lease shall remain in full force and effect; provided, however, if -34- as a result of such Partial Taking, it is, in the opinion of Landlord, economically unfeasible to reconstruct the remaining portion of the Premises, or Tenant in its reasonable good faith judgment determines that it is unable to use and operate the Premises in a satisfactory manner to conduct its business, then (a) this Lease shall terminate thirty (30) days from the date possession of the part taken shall be delivered to the condemnor, and (b) such Partial Taking shall be deemed to be and treated as a Total Taking. XVII.4 RECONSTRUCTION. If during the Term there shall be a Partial Taking and if this Lease shall not be terminated on account thereof pursuant to the provisions of the immediately preceding Section, then (a) Tenant shall, to the extent of such award, repair and restore the remaining portion of the Premises so that they constitute architectural units with the same general character and condition to the nearest extent possible under the circumstances as the previous Premises, (b) Landlord shall make condemnation damages received by Landlord available to Tenant, to the extent necessary to reimburse Tenant for Tenant's repair and restoration expenses, and (c) this Lease shall remain in full force and effect with respect to such remaining portion of the Premises. XVII.5 AWARD ON PARTIAL TAKING. The entire award with respect to any Partial Taking which shall not result in a termination of this Lease and which is not required to be used by Tenant for reconstruction shall be paid to Landlord. XVII.6 SETTLEMENT AGREEMENT. For the purposes of this Lease, all amounts paid pursuant to an agreement with any condemnor in settlement of any condemnation or any eminent domain proceeding affecting the Premises shall be deemed to constitute an award made in such proceeding. -35- XVII.7 ABATEMENT IN BASIC RENT. In the case of a Partial Taking which does not result in a termination of this Lease, the annual Basic Rent payable under this Lease after possession of the portion so taken shall be delivered to the condemnor shall be reduced in the same proportion as the amount of usable floor area of the buildings constituting part of the Premises shall have been reduced by such Taking; but any such Partial Taking shall not relieve Tenant from Tenant's liability to pay the full Additional Rent payable under this Lease, or from any of Tenant's other obligations hereunder, and, except as herein expressly provided, Tenant waives any right now or hereafter conferred upon Tenant by statute or otherwise to any suspension, diminution, abatement or reduction of Rent or to surrender this Lease or the Premises by reason of such Partial Taking. ARTICLE XVIII -ASSIGNMENT, SUBLETTING AND MORTGAGING XVIII.1 VOLUNTARY ASSIGNMENT OR OTHER TRANSFER OF LEASE. (A) Tenant shall not mortgage, pledge, hypothecate, or transfer this Lease or any part or portion of the Term hereby created, or interest therein (except as herein specifically set forth in this Lease). (B) Tenant shall not assign this Lease, or any part or portion of the Term hereby created or any interest therein, nor sublet all or any portion of the Premises, without the prior written consent of the Landlord being first obtained in each instance which consent shall not be unreasonable withheld, conditioned or delayed; provided, that, in addition to other reasons for which Landlord may withhold Landlord's consent, Landlord may, without other reason, withhold Landlord's consent if any one or more of the following are not true and correct: (i) Tenant remains fully liable under the Lease, (ii) the use of the Premises does not materially change or, of it does, such new use will not cause a diminution in value of the Premises as -36- determined, within ten (10) days of notice to Landlord, by a mutually acceptable independent third party real estate consultant or appraiser in the county where the Premises are located, having a minimum of 10 years experience, and (iii) Landlord and not Tenant, shall receive any and all rent or other consideration paid, directly or indirectly, by or on behalf of any such assignee or subtenant in excess of the Basic Rent with respect with any such assignment or sublet. Notwithstanding anything to the contrary contained in this Lease, Tenant may assign this Lease or its interest in this Lease to any of Tenant's subsidiaries, affiliates or parent companies or in connection with a merger in which Tenant is the surviving entity or the shareholders of Tenant own a majority of or control the surviving entity, a merger which does not meet the above requirements but such surviving entity has a net worth of not less than $2,500,000 as determined by GAAP or in lieu thereof Tenant deposits $65,000 as a security deposit to be held by Landlord to guaranty each of Tenant's obligations under this Lease, consolidation, reorganization, sale of substantially all of the assets of Tenant, initial public offering or stock sale without Landlord's consent; provided that notice of such assignment shall be given Landlord, and with respect to any assignment or sublet under any circumstances set forth in this Article XVIII: (i) Tenant shall not be relieved of its obligations under this Lease (I.E. Tenant shall remain fully liable under this Lease) and (ii) the use of the Premises shall not involve any greater environmental risk than the use anticipated by Tenant under this Lease based on past use of the Premises. (C) Except as otherwise provided in Section 18.1(B), neither this Lease, nor the leasehold estate of Tenant, nor any interest of Tenant hereunder in the Premises shall be subject to involuntary assignment, transfer or sale, or assignment, transfer or sale by operation of -37- law in any manner whatsoever, and any such attempted involuntary assignment, transfer or sale shall be void and of no effect. ARTICLE XIX - TENANT'S WORK XIX.1 TENANT'S WORK. Tenant shall, in a good and workmanlike manner, cause the improvements to the space agreed to by Tenant and Landlord located in Building Three and the other improvements to the Premises, if any, as agreed by Landlord and Tenant, to be completed in accordance with Government Regulation and the plans and specifications approved by Landlord and Tenant all as described in the work letter attached hereto as EXHIBIT "F" and made part hereof ("TENANT'S WORK LETTER"). ARTICLE XX - NOTICES XX.1 NOTICES. All notices, including, without limitation, exercises of options, demands, requests, consents and other communications required or relating to this Lease shall be effective only if in writing, and shall be effective upon delivery or refusal by hand, recognized overnight carrier or mailed United States registered or certified mail, return receipt requested, postage prepaid, to the other respective party at its address set forth below, or at such other address as such other party shall designate by notice. Notices to Landlord shall be addressed to the attention of Gary R. Smith, President and CEO, Smart Choice Automotive Group, Inc., 5200 S. Washington Avenue, Titusville, Florida 32780-7316, with a copy to Morgan, Lewis & Bockius LLP, 5300 First Union Financial Center, 200 S. Biscayne Boulevard, Miami, Florida 33131, Attention: John S. Fletcher, Esq. -38- Tenant's address for notice shall be: Eckler Industries, LLC 5130 and 5140 S. Washington Avenue Titusville, Florida 32780-7316 Attention: General Manager and Sun Capital Partners, Inc. 5535 Town Center Road Suite 802 Boca Raton, FL 33486 Attention: Marc Leder Rodger R. Krouse With a copy to: Klehr, Harrison, Harvey, Branzburg & Ellers LLP 260 South Broad Street Philadelphia, PA 19102 Attention: Bradley A. Krouse, Esquire ARTICLE XXI - QUIET ENJOYMENT XXI.1 QUIET ENJOYMENT. Tenant, upon observing and keeping all covenants, agreements and conditions of this Lease on Tenant's part to be kept and observed, shall quietly have and enjoy the Premises throughout the Term without hindrance or molestation by Landlord or by anyone claiming by, from, through or under Landlord, subject, however, to the exceptions, reservations and conditions of this Lease. ARTICLE XXII - TENANT'S ESTOPPEL CERTIFICATES XXII.1 ESTOPPEL CERTIFICATES. Tenant and Landlord agree, at any time and from time to time, upon not less than ten business days' prior written notice by either party, to execute, acknowledge and deliver to requesting party a statement in writing certifying (a) that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), (b) whether there are then -39- existing any offsets or defenses against the enforcement of any of the terms, covenants or conditions hereof upon the part of Landlord or Tenant to be performed (and if so, specifying the same), and (c) the dates to which the Rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser or mortgagee of the Premises. ARTICLE XXIII - LEASE NOT SUBJECT TO TERMINATION XXIII.1 LEASE WITH FIRST MORTGAGEE. In the event that, notwithstanding the express provision of this Lease, this Lease shall be deemed terminated by operation of law, or by action of court, or in the event any receiver, trustee in bankruptcy, liquidator or assignee of Landlord shall initiate any action for the taking of the Rent and the application thereof for the benefit of any creditors of Tenant other than the holder of a first mortgage on Landlord's interest in the Premises, then Tenant shall, upon ten days' written demand to Tenant by the holder of said first mortgage, enter into a new lease with said holder containing the same terms and provisions as this Lease. Forthwith upon the execution and delivery of such new lease, this Lease and all obligations of Tenant hereunder shall be deemed terminated without further action by either party hereto. ARTICLE XXIV - ENVIRONMENTAL MATTERS XXIV.1 COMPLIANCE WITH LAWS. Tenant shall cause all activities conducted at the Premises to be conducted in compliance in all material respects with all statutes, ordinances, regulations, orders, and requirements of common law concerning (i) those activities, (ii) repairs or construction of any improvements, (iii) handling of any materials, (iv) discharges to the air, soil, surface, or groundwater, and (v) storage, treatment or disposal of any material or waste at or connected with any activity at the Property ("Environmental Statutes"). -40- XXIV.2 PERMITS. Landlord represents and warrants that to the best of Landlord's knowledge, without inquiry, Landlord has, and prior operators of the Property had, all of the necessary permits, licenses, and similar approvals to conduct activities at the Premises in compliance with Environmental Statutes. Landlord shall, to the extent possessed by Landlord, provide Tenant with copies of all such permits concerning activities on the Demised Premises. XXIV.3 SITE CONTAMINATION. (i0 Landlord represents and warrants that, to the best of its knowledge, without inquiry and except as identified in the July 13, 1999 Phase II Environmental Site Assessment Report by Handex Environmental (the "Phase II"), there is no Contamination present at, on or under the Premises. (ii0 As used in this Lease, the term "Contamination" means the release and/or presence of Hazardous Substances at, on or under the Premises, which requires remediation under any Environmental Statutes. (iii0 As used in this Lease, the term "Hazardous Substances" shall mean any chemical, material or substance defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous waste", "restricted hazardous waste", "solid waste" or "toxic substances", or words of similar import under any applicable local, state or federal law or under the regulations adopted or publications promulgated pursuant thereto, including but not limited to the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601-9675, as amended; Subtitle I of the Resource Conservation and Recovery Act, 42 U.S.C. 6901-6991i, as amended; and the other Environmental Statutes. -41- XXIV.4 INDEMNIFICATION; LIMITATION OF LIABILITY. Landlord shall be responsible for performing any remediation of any Contamination at the Premises arising out of or relating to events occurring before the Commencement Date (except, to the extent relevant, for those raised in the Phase II) and Tenant shall be responsible for performing any remediation of any Contamination at the Premises arising out of or relating to events occurring during the Term, except such Contamination caused by or arising solely from contamination (i.e., the release and/or presence of Hazardous Substances which requires remediation under any Environmental Statutes) having its origin on any property other than the Premises or the Tenant Parking Areas, and the Tenant shall be relieved of such responsibility only to the extent that the requirement to remediate is directly attributed to such other property. Landlord shall each indemnify, defend and hold the other harmless of, from and against any and all expenses, loss or liability suffered by the other by reason of Landlord's or Tenant's breach of any provision relevant to either of Landlord or Tenant of this Article 24 including but not limited to, (a) any and all expenses required so that the Premises complies with Environmental Statutes; (b) any and all reasonable costs or damages, including but not limited to costs or damages resulting from litigation and Natural Resource Damages, that Landlord or Tenant may incur as a result of the presence, study, removal or remediation of any Contamination on the Premises or arising from the Premises; (c) any and all fines, penalties, or other sanctions assessed or imposed due to Landlord's or Tenant's failure to have complied with the Environmental Statutes and/or the presence of Contamination on the Premises as herein set forth; and (d) any and all legal and professional fees and costs incurred by Landlord or Tenant in connection with the foregoing. This indemnification shall survive the expiration or termination of this Lease. -42- XXIV.5 TENANT'S COVENANTS. Tenant shall cause all permits, licenses or approvals to be obtained, and shall cause all notifications and reports to be made, as required by Environmental Statutes applicable to the Premises. Tenant shall, at all times, cause compliance in all material respects with the terms and conditions of any such approvals or notifications. ARTICLE XXV - MISCELLANEOUS PROVISIONS XXV.1 INTEGRATION. This Lease, the Transition Services Agreement between Landlord and Tenant dated August _____, 1999 and Section 2(g) of the Merger Agreement between Landlord and Tenant dated August _____, 1999 and the documents referred to herein set forth all the promises, agreements, conditions and understandings between Landlord and Tenant relative to the leasing of the Premises, and there are no promises, agreements, conditions or understandings, either oral or written, between them other than as are herein set forth. No subsequent alteration, amendment, supplement, change or addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by them. XXV.2 NO RECORDING. This Lease shall not be recorded or otherwise filed or made a matter of public record, and any attempt to record or file same by Tenant shall be deemed a default by it hereunder. XXV.3 TIME OF THE ESSENCE. Time wherever specified herein for satisfaction of conditions or performance of obligations by Tenant is of the essence of this Lease. XXV.4 NO PARTNERSHIP. The parties do not intend to create hereby any partnership or joint venture between themselves with respect to the Premises or any other matter. XXV.5 SEVERABILITY. Any provision of this Lease that shall be prohibited or unenforceable in any jurisdiction or with respect to any person shall, as to such jurisdiction or person, be ineffective only to the extent of such prohibition or unenforceability, without -43- invalidating the remaining provisions hereof, and any such prohibition or unenforceability shall not invalidate or render unenforceable such provision in any other jurisdiction or, as the case may be, with respect to any other person. To the extent permitted by applicable law, the parties hereto hereby waive any law that renders any provision hereof prohibited or unenforceable in any respect. XXV.6 AUTHORITY. Each party warrants that it has full power, authority and legal right to execute and deliver this Lease, and to keep and observe all of the terms and provisions of this Lease on such party's part to be observed and performed. Each party warrants that this Lease is its valid and enforceable obligation. XXV.7 GOVERNING LAW. This Lease and all issues arising hereunder shall be governed by the laws of the State in which the Premises are located. XXV.8 COUNTERPARTS. This Lease may be executed by the parties hereto in separate counterparts, all of which, when delivered, shall together constitute one and the same instrument. XXV.9 HEADINGS; PRONOUNS. The headings of the sections of this Lease are for convenience only and have no meaning with respect to this Lease or the rights or obligations of the parties hereto. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein: "person", as used herein, includes an individual, corporation, partnership, trust, unincorporated association, government, governmental authority, or other entity; "Premises" includes each portion of the Premises and each estate or interest therein; "hereof", "herein", and "hereunder" and other words of similar import refer to this Lease as a whole; "Lease" includes these presents as supplemented or amended from time to time by written instrument(s) entered into by Tenant or Landlord; `Landlord" includes Landlord's successors and assigns; "Tenant" includes Tenant's permitted successors and assigns, if any, and -44- "parties" means Landlord and Tenant. Whenever the context may require, any pronoun used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of pronouns or nouns shall include the plural and vice versa. XXV.10 LIMITATION OF LANDLORD'S LIABILITY. The obligations of Landlord under this Lease do not constitute personal obligations of the individual partners, directors, officers, or shareholders of Landlord, and Tenant shall look solely to the real estate that is the subject of this Lease and the escrowed funds described in EXHIBIT "F" and to no other assets or property of the Landlord for satisfaction of any liability in respect of this Lease and shall not seek recourse against any other property of Landlord, or against the individual partners, directors, officers or shareholders of Landlord or any of their personal assets for such satisfaction. XXV.11 SURVIVAL. All agreements and obligations of Tenant hereunder which require observance or performance after the expiration or termination of this Lease, or which can not reasonably be ascertained as having been observed or performed at the time of such expiration or termination, shall survive, and be enforceable against Tenant following, such expiration or termination. XXV.12 WAIVER OF SUBROGATION. Notwithstanding any provision to the contrary under this Lease, each party hereto hereby waives any and every claim which arises or which may arise in its favor and against the other party and its directors, officers, partners, employees and agents during the term and extended term, if any, for any and all loss of, or damage to, any of its property located within or upon or constituting a part of the Premises, to the extent that such loss or damage is covered under an insurance policy or policies carried by Landlord or Tenant or required to be carried under this Lease by Landlord or Tenant and to the extent such policy or policies contain provisions permitting such waivers of claims. Each party agrees to -45- request its insurers to issue policies containing such provisions and if any extra premium is payable therefor, the insured party shall so notify the party which would benefit from the provision and such benefitted party shall have the option to pay such additional premium in order to obtain such benefit, but if the benefitted party declines to make such payment, the insured party will not be required to obtain such a waiver provision. If the benefitted party pays the additional premium required by the insurer in order to obtain such a benefit, the insured party shall promptly thereafter provide the benefitted party with certificates of such insurance evidencing such a waiver provision. XXV.13 SIGNS. Tenant shall have the right, with the consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, to erect and install signage on or about the Premises, including on exterior walls in and around the Premises, so long as Tenant complies with Governmental Regulation jurisdiction therefor and at the expiration of this Lease, removes all signage and completes, at Tenant's sole expense, repairs to all damage to the Premises caused by such removal, and Landlord hereby consents to Tenant erecting and installing a sign located in the front of the Premises consisting of the company's name and logo. XXV.14 PARKING. The Premises shall include the parking areas indicated on EXHIBIT "G" (the "Tenant Parking Areas") for parking for Tenant's employees, customers and business invitees. The parties acknowledge that Landlord shall have the right to relocate Tenant, in whole or in part, from the 15 parking spaces located on Parcel 4, the area labeled "52 Spaces" and/or the portions of the area labeled "48 Spaces" not located on Parcel 5 if Landlord sells or leases Parcel 6 or Parcel 4 or uses Parcel 6 or Parcel 4 for its own business purpose (including parking), upon 10 business days' notice to Tenant, provided Landlord has provided, at Landlord's sole cost and expense, and has immediately made available to Tenant on any parcel, -46- including Parcel 7 and/or 8 the same number of fully constructed, graded, paved and striped spaces that it takes from Tenant; except that Landlord shall only be responsible for one-half of the cost to construct, grade, pave and stripe the "50/50 Spaces". The "50/50 Spaces" shall be those Tenant parking spaces in excess of the first 100 spaces available to Tenant for parking anywhere on the Premises or the Tenant Parking Areas (including the 10 customer spaces on the eastern portion of Parcel 1) up to and including the 125th such parking space. Landlord agrees that at all times it shall provide and make available to Tenant the exclusive use of 125 paved and striped parking spaces and the ability to access such spaces in a reasonable manner. Upon Tenant's request, Landlord shall within a reasonable time make such additional space available to Tenant to provide Tenant a total of 200 parking spaces; provided, however, Tenant shall be responsible to construct, grade, pave and stripe such parking spaces needed by Tenant in excess of 125 spaces. All such parking spaces shall be used by Tenant only for Tenant's employees, customers and business invitees. Notwithstanding anything to the contrary contained in this Paragraph 25.14, if Tenant constructs any parking spaces and Landlord thereafter relocates Tenant from such spaces, which right of relocation Landlord shall have on 10 business days' notice from time to time during the Term, Landlord shall pay all of the cost and expense relating to the construction, grading, paving and striping of the number of spaces needed as a result of such relocation(s). During the once each year Eckler 3 Day Weekend Reunion, Tenant shall have the right to park in available parking spaces consistent with past practices on any of Landlord's parcels shown on EXHIBIT "D". -47- XXV.15 BROKERS. Tenant represents and warrants that it has not employed any broker or agent as its representative in the negotiation for or the obtaining of this Lease, and agrees to defend, indemnify and hold Landlord harmless from any and all cost or liability for compensation claimed by any such broker or agent. Landlord represents and warrants that it has not employed any broker or agent as its representative in the negotiation for or the obtaining of this Lease, and agrees to defend, indemnify and hold Tenant harmless from any and all cost or liability for compensation claimed by any such broker or agent. XXV.16 PREVAILING PARTY. If either party shall bring an action against the other to enforce or interpret the terms of this Lease or otherwise arising out of this Lease, the prevailing party in such action shall be entitled to its costs of suit and reasonable attorney's fees. XXV.17 EFFECT OF CONVEYANCE OR ASSIGNMENT BY LANDLORD. If Landlord shall convey, assign or transfer its interest in this Lease, which rights Landlord shall have, Tenant shall look to the purchaser, assignee or transferee of Landlord's interest in this Lease for the performance of Landlord's obligations hereunder and so long as such transferee assumes all of Landlord's obligations under this Lease and owns fee simple title to the Premises Landlord shall from and after such conveyance, assignment or transfer be relieved and discharged from any and all liabilities and obligations under this Lease. Tenant agrees to attorn to any purchaser, assignee or transferee and to execute any written attornment agreement reasonably requested by such purchaser, assignee or transferee. XXV.18 RADON DISCLOSURE. Tenant is hereby advised that radon 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 -48- regarding radon and radon testing may be obtained from your county public health unit. The foregoing disclosure is provided to comply with state law and is for informational purposes only. XXV.19 LANDLORD'S DEFAULT. Except as otherwise provided in this Lease, Landlord shall be in default under this Lease if Landlord fails to perform any of its obligations hereunder and said failure continues for a period of thirty (30) days after written notice thereof from Tenant to Landlord (unless such failure cannot reasonably be cured within thirty (30) days and Landlord shall have commenced to cure said failure within said thirty (30) days and continues diligently to pursue the curing of the same to completion but not to exceed ninety (90) days) and Tenant shall have any rights and remedies available to it at law or in equity or under this Lease. To the extent Landlord owes Tenant any money under Section 2(g) of the Merger Agreement as determined under said Section 2(g), Tenant may, at its option and upon written notice to Landlord, deduct such amounts due Tenant in accordance with such Section 2(g) from the Rent due Landlord. XXV.20 MEMORANDUM OF LEASE. This Lease shall not be recorded, but, upon the request of either party, the parties shall execute a short form Memorandum of Lease and/or easements granted under this Lease, which may be recorded by either party at its expense and which shall include provisions satisfactory to Landlord to enable Landlord to remove such Memorandum of record upon the termination of this Lease. The Memorandum of Lease shall, without any document or action by the parties, terminate and be of no force or effect upon the termination (whether at the end of the Term or earlier because of default or whatever cause), provided, notwithstanding the foregoing, Tenant will confirm in recordable form, any such termination of this Lease (whether at the end of the Term or earlier as above set forth) and of the Memorandum of Lease before ten (10) business days after notice from Landlord, failing which -49- Landlord is hereby granted an irrevocable power of attorney to execute such termination documents for and in the name of Tenant. XXV.21 LANDLORD'S LIEN WAIVER. Upon Tenant's written request, Landlord shall agree to execute and deliver a Landlord's Lien Waiver for the benefit of any lenders of Tenant in the form of EXHIBIT "H" attached hereto and made a part hereof. XXV.22 SURVEY. Landlord shall use all reasonable efforts to obtain a survey of the Premises and legal descriptions of each parcel and the access easement within thirty (30) days of the Commencement Date. IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease Agreement to be duly executed, all as of the day and year first above written. Witnesses: SMART CHOICE AUTOMOTIVE GROUP, INC. /s/ MARIA DIAZ By: /s/ ROBERT J DOWNING - --------------------------- ---------------------------- Print Name: Maria Diaz Name: Robert J. Downing Title: Vice President /s/ DOUGLAS K. BISCHOFF - ------------------------------- Attest: Print Name: Douglas K. Bischoff -------------------------- Name: Title: (Corporate Seal) -50- Witnesses: ECKLER INDUSTRIES, LLC /s/ MICHAEL KALB By: /s/ RODGER R. KRAUSE - -------------------------- -------------------------- Print Name: Name: Rodger R. Krause Title: Vice President /s/ MARC J. LEDER - --------------------------- Print Name: Attest:/s/ MICHAEL KALB ------------------------- Name: Michael Kalb Title: (Corporate Seal) -51- EXHIBIT "F" TENANT'S WORK LETTER 1. PLANS AND SPECIFICATIONS. a. Improvements to the Premises ("Tenant's Work") shall be completed in accordance with detailed architectural and/or engineering working drawings and material specifications (the "Plans and Specifications") which shall be prepared by Tenant at Tenant's expense (and as an offset to the Tenant Improvement Allowance defined in Section 2 hereof). The Plans and Specifications shall include, without limitation, the following to the extent reasonably required: i. fully dimensioned architectural plan; ii. electric telephone outlet diagram; iii. reflective ceiling plan with light switches; iv. electric power circuitry diagram; v. all color and finish selections; and vi. all special equipment and fixture specifications. b. Tenant shall use a licensed architect, engineer or space planner in preparation of the Plans and Specifications. c. Tenant shall cause the Plans and Specifications to be prepared, at Tenant's expense, and submitted to Landlord not later than September 17, 1999. Landlord shall then have a period of not more than ten (10) business days following such submittal in which to review and approve the Plans and Specifications or state any objections to same in writing. Once Plans and Specifications have been accepted by Landlord, they may be modified only with Landlord's written approval, which approval shall not be unreasonably withheld, provided if such change is made by Tenant or required under applicable code, ordinance or regulation, Tenant shall be liable for any additional costs in excess of the Tenant Improvement Allowance incurred as a result of any such change. 2. TENANT IMPROVEMENT ALLOWANCE. a. Notwithstanding anything contained in this Work Letter to the contrary, Landlord shall provide Tenant a sum not to exceed $275,000, as a tenant work allowance for construction of Tenant's Work (the "Tenant Improvement Allowance"), including the cost of architectural, engineering and working drawings and all other costs associated with Tenant's Work. Tenant shall use this Tenant Improvement Allowance to offset costs incurred for construction of improvements to the Premises and any permit, architectural, engineering and all other fees and expenses relating thereto. In the event the cost of the Tenant's Work and related fees exceed the Tenant Improvement Allowance, Tenant shall pay such excess ("Tenant's Costs"). It is expressly understood that Landlord shall in no event be required to expend any monies in excess -52- of the Tenant Improvement Allowance. Tenant shall in no event receive any cash or credit to rent for any unused portion of the Tenant Improvement Allowance. b. The Tenant Improvement Allowance shall be deposited, by Landlord, into a title company (the "Title Company") escrow account (the "Escrow Account"). The Title Company shall be approved (reasonably) by Landlord and Tenant, each agreeing that First American Title Co. and Commonwealth Land Title Insurance Company are pre-approved. The Tenant Improvement Allowance shall be held and distributed by the Title Company in accordance with this Tenant's Work Letter and any escrow agreement required by the Title Company each month beginning after commencement of construction upon written request by Tenant, such request, in each instance, being accompanied by (i) lien waivers and releases of lien for the general contractor, subcontractors and materialmen with respect to disbursements for the preceding months, (ii) a certificate to Landlord from Tenant's architect or engineer (who shall be a Florida licensed architect or engineer) stating that all of Tenant's Work to the date of each such certificate has been completed in compliance with Governmental Regulation and in compliance in all material respects with the Plans and Specifications, and that a sufficient amount of money remains in the Escrow Account as of the date of each such certificate to pay for the completion of Tenant's Work. In the event any change order to the Plans and Specifications causes an increase in the cost of Tenant's Work, causing the total cost of Tenant's Work to exceed the Tenant Improvement Allowance, then Tenant shall, in each instance, deposit within five (5) business days into the Escrow Account the amount of such increased costs, provided such amount exceeds $25,000. In the event any such increase is $25,000 or less, then Tenant shall not be required to deposit such amount into the Escrow Account, but Tenant shall, nevertheless, be and remain solely liable for and shall pay such amount(s) as a Tenant's Costs. Tenant shall prepare, in accordance with Government Regulations for Landlord's review and approval, such approval not to be unreasonably withheld, a Notice of Commencement with respect to Tenant's Work and Tenant shall thereafter record the Notice of Commencement. Disbursements of the Tenant Improvement Allowance shall be made in compliance with the hold back requirements of Governmental Regulation. 3. CONTRACTOR(S); PERMITS; PERFORMANCE BOND. a. Tenant shall use licensed contractors, each of which shall maintain sufficient insurance in customary amounts in accordance with industry standards, and shall be responsible for obtaining all necessary permits and approvals at Tenant's sole expense. Tenant shall advise its contractor(s), subcontractor(s) and material supplier(s) that no interest of Landlord in the Premises, the Building or the Property shall be subject to liens to secure payment of any amount due for work performed or materials installed in the Premises and that Landlord has recorded a notice to that effect in the public records of Brevard County, Florida. Landlord shall permit Tenant and Tenant's contractor(s) to enter the Premises prior to the Commencement Date to accomplish any work as agreed, however, Landlord shall not be liable in any way for any injury, loss, damage or delay which may be caused by or arise from such entry by Tenant, its employees or contractor(s). -53- b. Tenant covenants and agrees to pay the general contractor, sub-contractors and materialmen as the work progresses, the entire cost of supplying the materials and performing the work shown on Tenant's approved Plans and Specifications, unless a dispute arises, in which case, such sums shall remain in the Escrow. Tenant shall pay (or bond off in accordance with Florida Statutes) within five (5) business days after notice thereof, any liens filed with respect to the Premises and/or Landlord's other property in connection with Tenant's Work. c. Landlord shall have the right to disapprove any of Tenant's contractors or subcontractors if Landlord has reason to believe that such contractors or subcontractors are: (i) not licensed as required by any governmental agency; (ii) not technically qualified or sufficiently staffed to do the work; (iii) not financially capable of undertaking the work or (iv) do not carry required insurance. d. Landlord, in its sole and absolute discretion, may require contractor(s) to provide a performance and payment bond(s) covering the cost of Tenant's Work. The cost of such performance and payment bond shall be borne by Tenant, provided, however, that such cost may be paid from the Tenant Improvement Allowance. e. All work shall be done in a good, workmanlike and expedient manner. Tenant Work shall not impair or effect the structural components of the Building or any of the Building's systems (other than those previously approved in writing in connection with Landlord's approval of the Plans and Specifications) without the prior written approval of Landlord in each instance. 4. INSPECTION OF TENANT'S WORK During the progress of the Tenant's Work, Tenant's Work and the Premises shall be subject to inspection by representatives of Landlord who shall be permitted access and the opportunity to inspect, at all reasonable times, but this provision shall not in anyway whatsoever create any obligation on Landlord to conduct such inspections. 5. LEGAL REQUIREMENTS All such Tenant's Work shall be performed in compliance with Governmental Regulations. 6. EVIDENCE OF CERTIFICATES. -54- Prior to commencement of any work, Tenant shall furnish to Landlord certificates evidencing the existence of (a) workmen's compensation insurance covering all persons employed for such work; (b) commercial general liability and property damage insurance; and (c) Builder's Risk Insurance naming, in each instance, Landlord and Tenant as insured, with liability coverage of at least $1 million. Such insurance shall be placed with insurance companies reasonably satisfactory to Landlord and licensed to do business in the State of Florida, and each policy shall provide that it may not be canceled without 30 days' prior written notice to Landlord. 7. CAPITALIZED TERMS. All undefined capitalized terms used herein shall have the same meaning as in the Lease. 8. INCONSISTENT TERMS. In the event that any term in this Work Letter shall be inconsistent with any term of the Lease, the terms of this Work Letter shall prevail. -55- EX-99.1 4 For Immediate Release SMART CHOICE AUTOMOTIVE GROUP ANNOUNCES COMPLETION OF SALE OF ITS ECKLER INDUSTRIES SUBSIDIARY Smart Choice Automotive Group, Inc. (NASDAQ: SMCH) ("Smart Choice"), a leading retailer of "dealer-financed" used cars in the Southeastern United States, announced today that it has completed the sale of its wholly owned subsidiary, Eckler Industries, Inc. ("Eckler's"), to Sun Automotive Partners L.P. Eckler's is a manufacturer and supplier of aftermarket Corvette parts and accessories. Gary R. Smith, President and CEO, stated that "proceeds from the sale would be used primarily to reduce debt and the remainder would be used for working capital purposes. It also allows our management team to focus on our primary business of selling and financing used cars and trucks throughout Florida to sub-prime borrowers." THIS PRESS RELEASE INCLUDES STATEMENTS THAT MAY CONSTITUTE "FORWARD-LOOKING" STATEMENTS, USUALLY CONTAINING THE WORDS "BELIEVE," "ESTIMATE," "PROJECT," "EXPECT," OR SIMILAR EXPRESSIONS. THESE STATEMENTS ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS INHERENTLY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS. FACTORS THAT WOULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, CONTINUED ACCEPTANCE OF THE COMPANY'S PRODUCTS IN THE MARKETPLACE, COMPETITIVE FACTORS, RECEIVABLES PORTFOLIO RISKS, DEPENDENCE UPON THIRD-PARTY VENDORS, AND OTHER RISKS DETAILED IN THE COMPANY'S REGISTRATION STATEMENT ON FORM S-1 (FILE NO. 333-59375) AND PERIODIC REPORT FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. BY MAKING THESE FORWARD-LOOKING STATEMENTS, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE THESE STATEMENTS FOR REVISIONS OR CHANGES AFTER THE DATE OF THIS RELEASE. -----END PRIVACY-ENHANCED MESSAGE-----