-----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, La42TXNJ7g7jISnwhnW8iMjKjGsHVORwwFtlLqLZ7X7ibneDdUvNgCax2w2yo1wY CpryPrbE351bNF6v75PAew== 0000949091-98-000007.txt : 19980309 0000949091-98-000007.hdr.sgml : 19980309 ACCESSION NUMBER: 0000949091-98-000007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19971210 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980306 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMART CHOICE AUTOMOTIVE GROUP INC CENTRAL INDEX KEY: 0000949091 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 591469577 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-14082 FILM NUMBER: 98559513 BUSINESS ADDRESS: STREET 1: 5200 S WASHINGTON AVE CITY: TITUSVILLE STATE: FL ZIP: 32780 BUSINESS PHONE: 4072699680 MAIL ADDRESS: STREET 1: PO BOX 5637 CITY: TITUSVILLE STATE: FL ZIP: 32783 FORMER COMPANY: FORMER CONFORMED NAME: ECKLER INDUSTRIES INC DATE OF NAME CHANGE: 19950912 8-K 1 FORM 8-K FOR SMART CHOICE AUTOMOTIVE GROUP, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K ------------------------- CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange act of 1934 Date of Report: December 10, 1997 (Date of earliest event reported) ----------------------------------------------- SMART CHOICE AUTOMOTIVE GROUP, INC. (Exact name of registrant as specified in its charter) ------------------------------------------------ Florida 1-14082 59-1469577 (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation or organization) 5200 South Washington Avenue, Titusville, Florida 32780 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (407) 269-9680 ----------------------- Item 5. Other Events. Effective December 10, 1997, the Registrant secured $1,000,000 in equity funding from certain accredited investor buyers represented by, among others, Promethean Investment Group, LLC, in a private placement with such buyers of (i) 100 shares of its Series A Redeemable Convertible Preferred Stock ("Preferred Stock") at $10,000 per share pursuant to that certain Securities Purchase Agreement between the Registrant and the buyers and (ii) a total of 30,000 common stock purchase warrants. The Preferred Stock is convertible into shares of Common Stock of the Registrant ("Common Stock") at a conversion price which, at the option of the buyers, is either fixed at a rate of 135% of the market price of such Common Stock on the date of issuance of the Preferred Stock, or floating at a rate of 100% of the market price of such Common Stock if converted during the period 90 days after the issuance date of the Preferred Stock and 90% of the market price if converted at any time after 90 days for a period of five years; such conversion rate is also subject to anti-dilution protections in favor of the buyers. The shares of Common Stock issuable upon exercise of the warrants may be purchased by the holders for a purchase price of $5.2313 per share, subject to adjustment pursuant to certain anti-dilution protections stated therein. The Preferred Stock has no voting rights. The Preferred Stock has registration rights pursuant to a Registration Rights Agreement. The foregoing summary of the transaction is qualified in its entirety by the more detailed information contained in the copies of the Second Articles of Amendment to the Articles of Incorporation, the Securities Purchase Agreement, the form of Warrant and the Registration Rights Agreement attached as Exhibits 3.1, 10.6, 10.7 and 10.8, respectively, to this Current Report. Effective January 23, 1998, the Registrant secured on behalf of Eckler Industries, Inc., its wholly-owned subsidiary ("Eckler"), a $3,000,000 term loan from Stephens Inc. ("Stephens") (the "Stephens Loan"), and in connection therewith entered into an Amendment to Guaranty Agreement with Stephens amending an existing Guaranty Agreement between the Registrant and Stephens, pursuant to which the Registrant unconditionally guarantees the Stephens Loan, and an Amendment to Pledge and Security Agreement, amending an existing Pledge and Security Agreement between the Registrant and Stephens, pursuant to which the Registrant pledged to Stephens a first lien and security interest in and to all of the issued and outstanding capital stock of Eckler. In addition, the Stephens Loan was secured by all of the personal property assets of Eckler pursuant to a separate Amendment to Security Agreement between Stephens and Eckler. The Stephens Loan bears interest at a rate of 10% per annum. Such summary of the transaction is qualified in its entirety by the more detailed information contained in the copies of the Promissory Note, Amendment to Guaranty Agreement, and Amendment to Pledge and Security Agreement attached as Exhibits 10.1, 10.4 and 10.5, respectively, to this Current Report. The Registrant's Common Stock is listed on the Nasdaq SmallCap Market ("Nasdaq"). Effective February 23, 1998 Nasdaq issued new requirements for maintaining listing on the SmallCap Market. These new requirements include maintaining any one of the following: (i) net tangible assets of at least $2 million; (ii) net income of at least $500,000 in two of the last three years; or (iii) market capitalization of at least $35 million. The Registrant does not meet requirement (i) because of the goodwill that appears on the Registrant's balance sheet as a result of acquisitions by the Registrant, which is not eligible for pooling of interests accounting due primarily to change of control considerations. The Registrant does not meet requirement (ii) because the Registrant incurred a loss in 1997 and the Registrant as presently configured resulted from a combination of companies effective in January of 1997, none of which individually or in the aggregate had net income under generally accepted accounting principles of $500,000. As of February 23, 1998 the Registrant's market capitalization was $22.8 million, and Nasdaq has notified the Registrant that the Common Stock would be scheduled for delisting unless the Registrant requested a hearing for an exception to the new requirements. The Registrant intends to request a hearing for an exception with respect to these requirements which would stay the delisting. On February 24, 1998 the Registrant's subsidiary First Choice Auto Finance, Inc. increased its existing line of credit (the "Manheim Line of Credit") with Manheim Automotive Financial Services, Inc. ("Manheim") from $3 million to $3.75 million. The Manheim Line of Credit bears interest at 1.5% above the prime rate and is secured by used automobile inventory of the Registrant purchased from Manheim. The Promissory Note evidencing the Manheim Line of Credit is due on demand. The Registrant is guarantor on the Manheim Line of Credit. Such summary of the transaction is qualified in its entirety by the more detailed information contained in the copies of the Promissory Note and Guaranty Agreement attached as Exhibits 10.9 and 10.10, respectively, to this Current Report. Item 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Businesses Acquired. Not Applicable. (b) Pro Forma Financial Information Not Applicable (c ) Exhibits EXHIBIT DESCRIPTION 3.1 Articles of Amendment to Articles of Incorporation (set forth as Exhibit 3.1 to the Registrant's Form 8-K Report dated September 24, 1997 and incorporated herein by reference) 10.1 Promissory Note by Eckler Industries, Inc. in favor of Stephens Inc. 10.2 Guaranty Agreement by Registrant to Stephens Inc. (set forth as Exhibit 10.4 to the Registrant's Form 8-K Report dated September 24, 1997 and incorporated herein by reference) 10.3 Pledge and Security Agreement between Registrant and Stephens Inc. (set forth as Exhibit 10.5 to the Registrant's Form 8-K Report dated September 24, 1997 and incorporated herein by reference) 10.4 Amendment to Guaranty Agreement between Registrant and Stephens Inc. 10.5 Amendment to Pledge and Security Agreement between Registrant and Stephens Inc. 10.6 Securities Purchase Agreement between the Registrant and certain buyers represented by Promethean Investment Group, L.L.C., among others (set forth as Exhibit 10.6 to the Registrant's Form 8-K Report dated September 24, 1997 and incorporated herein by reference). 10.7 Form of Warrant from Registrant to certain buyers represented by Promethean Investment Group, L.L.C., among others (set forth as Exhibit 10.7 to the Registrant's Form 8-K Report dated September 24, 1997 and incorporated herein by reference). 10.8 Registration Rights Agreement between Registrant and certain buyers represented by Promethean Investment Group, L.L.C., among others (set forth as Exhibit 10.8 to the Registrant's Form 8-K Report dated September 24, 1997 and incorporated herein by reference). 10.9 Promissory Note, dated February 24, 1998, First Choice Auto Finance, Inc., maker, and Manheim Automotive Financial Services, Inc., payee 10.10 Guaranty, dated March 21, 1997 from the Registrant in favor of Manheim Automotive Financial Services, Inc. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: March 5, 1998 SMART CHOICE AUTOMOTIVE GROUP, INC. By: /s/ Joseph E. Mohr ----------------------------- Joseph E. Mohr, Sr. Vice President and Chief Financial Officer EXHIBIT INDEX ------------- EXHIBIT DESCRIPTION 10.1 Promissory Note by Eckler Industries, Inc. in favor of Stephens Inc. 10.4 Amendment to Guaranty Agreement between Registrant and Stephens Inc. 10.5 Amendment to Pledge and Security Agreement between Registrant and Stephens Inc. 10.9 Promissory Note, dated February 24, 1998, First Choice Auto Finance, Inc., maker, and Manheim Automotive Financial Services, Inc., payee 10.10 Guaranty, dated March 21, 1997 from the Registrant in favor of Manheim Automotive Financial Services, Inc. EX-10.1 2 PROMISSORY NOTE IN FAVOR OF STEPHENS INC. PROMISSORY NOTE 1. DATE AND PARTIES. This Promissory Note ("Note") is dated as of January 23, 1998, and the parties and their mailing addresses and Borrower's tax identification number are as follows: BORROWER: Eckler Industries, Inc. 5200 S. Washington Avenue Titusville, FL 32780 Tax ID Number: 59-3471762 HOLDER: Stephens Inc. 950 East Paces Ferry Road, Suite 310 Atlanta, GA 30326 Attn: David Linch 2. PROMISE TO PAY. For value received, Borrower promises to pay to the order of Holder, in accordance with the provisions of this Note, at Holder's office at the address above, or at such other place as Holder may designate, the principal sum of Three Million and No/100 Dollars ($3,000,000.00) plus interest from the date of disbursement on the unpaid principal balance at the rate of ten percent (10%) per annum. After the Maturity Date (defined herein), whether by acceleration or otherwise, the Note shall bear interest at the maximum rate allowed by law until paid in full. The interest permitted by this Note is limited to the maximum lawful amount of interest (Maximum Lawful Interest ) permitted under applicable federal and state laws, whichever is greater. If the interest accrued and collected exceeds the Maximum Lawful Interest as of the time of collection, such excess shall be applied to reduce the principal amount outstanding. If or when no principal amount is outstanding, any excess interest shall be refunded to Borrower. All fees and charges accrued, assessed, or collected which constitute interest shall be amortized and pro-rated over the full term of the Note for purposes of determining the Maximum Lawful Interest. 3. ADVANCE AND FUNDING PROVISIONS. This Note is a Term Note. No advances will be made after the initial advance. 4. TERMS OF PAYMENT. All principal advanced under this Note and all interest accrued under this Note are due and payable to Holder and shall be paid to Holder as follows: All unpaid interest then accrued is due and payable in semi-annual installments on the 30th day of each June and December prior to maturity, beginning on the 30th day of June, 1998. Principal on this Note is due and payable $1,000,000 on June 30, 1998 and $2,000,000 on June 30, 1999; provided that all the outstanding principal hereunder shall be due and payable on the sale of all or substantially all of the outstanding stock or assets of the Borrower or the completion by Smart Choice Automotive Group, Inc., a Florida corporation and the parent of the Borrower ("Smart Choice"), of an underwritten public offering of equity securities in which Smart Choice realizes at least $10 million in gross proceeds. This Note may be prepaid in whole or in part at any time without premium or penalty. COLLATERAL: The collateral (the "Collateral") securing this note includes but is not limited to: All accounts receivable now owing or in the future accruing to Borrower, all inventory, equipment, instruments, documents, chattel paper and general intangibles now owned by or hereafter acquired by Borrower as more particularly described in that certain Security Agreement dated October 3, 1997 between Holder and Borrower, as amended by that certain Amendment to Security Agreement between the Borrower and the Holder of even date herewith; and All of the issued and outstanding capital stock of Eckler Industries, Inc. on terms and conditions more particularly described in that certain Pledge and Security Agreement between Holder and Smart Choice dated September 30, 1997, as amended by that certain Amendment to Pledge and Security Agreement between Smart Choice and the Holder of even date herewith. This Note is also guaranteed under that certain Guaranty Agreement dated September 30, 1997 between Smart Choice and Holder, as amended by that certain Amendment to Guaranty Agreement between the Smart Choice and the Holder of even date herewith. 5. RECEIPT OF COPY. By signing this Note, Borrower acknowledges that he has read this entire Note and Exhibits, if any, prior to execution and that it received a copy (copies) of this Note. Borrower agrees to all provisions of this Note and undertakes to perform all obligations of Borrower hereunder. 6. EVENTS OF DEFAULT. Borrower shall be in default upon the occurrence of any of the following events, circumstances or conditions ("Events of Default"): (a) Failure by Borrower to make any payment to Holder when due; (b) A default or breach under any of the terms of the Note, or any other Loan Document (as hereinafter defined); (c) A default or breach under any of the terms of any note, loan agreement, security agreement, subordination agreement, mortgage, deed of trust, deed to secure debt, assignment of beneficial interest, guaranty agreement, trust deed or any other document or instrument evidencing, guaranteeing, or securing any other obligations of Borrower; (d) The making or furnishing of any verbal or written representation, statement, or warranty to Holder which is false or incorrect in any material respect or the failure to furnish facts necessary to prevent any statement made by, or on behalf of Borrower or any guarantor of the Note or other obligations of Borrower to Holder from being materially misleading; (e) The death, dissolution, liquidation or insolvency of Borrower, the appointment of a receiver by or on the behalf of Borrower, the voluntary or involuntary termination of existence by Borrower or any guarantor or the commencement under any present or future federal or state insolvency, bankruptcy, reorganization, composition or debtor relief law by or against Borrower or any guarantor of the Note or other obligation of Borrower to Holder; (f) Entry of a judgment against Borrower or any guarantor; (g) A material adverse change in the financial condition of Borrower or any guarantor; or a good faith belief by Holder at any time that Holder is insecure, that the prospect of any payment is impaired, or that any collateral securing the Note is impaired; (h) Failure of Borrower or of any guarantor to pay and provide proof of payment of any tax, assessment, rent, insurance premium, or escrow payment on or before its due date; (i) Without the prior written consent of Holder: (i) creation of any lien or encumbrance on, or any sale, lease or transfer of, or any contract to transfer, sell or lease, any collateral securing the Note or other obligation of Borrower to Holder; (ii) transfer of ownership or control of the business of Borrower or Smart Choice or more than fifty percent (50%) of the ownership of Borrower or Smart Choice, whether by transfer of shares, partnership interest, joint venture, pledge or otherwise; or (iii) any action by Borrower or any guarantor to become a party to any merger or consolidation; (j) The termination of any guaranty of the Note by any guarantor, or a default on any debt owed by Borrower or any guarantor to any other creditor; (k) Use of any portion of the loan proceeds in any transaction which may cause Holder to directly or indirectly incur any securities or environmental liability; or (l) Any charge or indictment against Borrower or any guarantor under a federal or state law for which forfeiture of any portion of the Collateral is a potential penalty. 7. REMEDIES ON DEFAULT. If an Event of Default occurs, then Holder any exercise any one or more of the following rights and remedies, and any other rights and remedies provided in any of the Loan Documents as Holder, in its sole discretion, may deem necessary or appropriate: (a) declare the unpaid principal of, and all interest then accrued, on the Loan and the Note, to be forthwith due and payable, whereupon the same shall forthwith become due and payable without presentment, demand, protest, notice of default, notice of acceleration or of intention to accelerate or other notice of any kind, all of which Borrower hereby expressly waives, anything contained herein or in the Note to the contrary notwithstanding, (b) reduce any claim to judgment, and/or (c) without notice of default or demand, pursue and enforce any of Holder's rights and remedies under any of the Loan Documents, or otherwise provided under or pursuant to any applicable law or agreement; provided however, that if any Event of Default specified in Subsection (e) above shall occur, the principal of, and all interest then accrued on, the Note and other liability hereunder shall thereupon become due and payable automatically and concurrently therewith, without any further action by Holder and without presentment, demand, protest, notice of default, notice of acceleration or intention to accelerate or other notice of any kind, all of which Borrower hereby expressly waives. 8. SET-OFF. Borrower acknowledges and agrees that upon the occurrence of an Event of Default, Holder may exercise its right to set-off, without demand or notice to Borrower or any other person or entity, to pay all or any part of the outstanding principal and accrued interest owed on this Note against any obligation Holder or any participant in the Note may have, now or hereafter, to pay money to Borrower, including but not limited to any balances in any account of Borrower. Where Borrower may obtain payment only with the endorsement or consent of someone who has not agreed to pay this Note, Holders' right of set-off will extend to Borrower's interest in the obligation. Holder's right to set-off will not apply to accounts or obligations in which Borrower's rights are solely as a fiduciary for another or to accounts exempt by law from the claims of creditors. Holder's right of set-off may be exercised without regard to the existence or value of any Collateral securing this Note, and without regard to the number or creditworthiness of any other persons or entities who have agreed to pay this Note. Borrower agrees to indemnify and hold Holder harmless from any person's or entity's claims arising as a result of Holder's exercise of Holders' right of set-off and the costs and expenses arising from any such claim, including without limitation, attorney's fees. In addition to the right of set-off, to further secure payment of the Note, Borrower hereby grants, conveys and transfers to Holder a continuing security interest in all of Borrower's accounts with Holder or with any participant in the Note. 9. COLLECTION EXPENSES. Upon a default on this Note, Holder may recover from Borrower and all guarantors or any of them, all costs and expenses incurred by Holder in collecting and enforcing this Note and reasonable costs and expenses in preserving, selling or disposing of collateral and realizing on any security. Such costs and expenses shall include, but are not limited to, reasonable filing fees, costs of publication, deposition fees, stenographer fees, witness fees, attorneys fees, paralegal fees, and any other court costs, plus costs of collecting and enforcing the Note. Any such reasonable collection costs and expenses shall be added to the principal amount of the Note and shall accrue interest at the same rate as the Note. 10. ATTORNEYS' FEES. Borrower indemnifies Holder and holds Holder harmless for all reasonable attorneys fees incurred by Holder, without limitation, for the enforcement and collection of the obligations under this Note, if it is placed in the hands of an attorney for collection, or for the protection of any collateral or lien which secures this Note. 11. WAIVER AND CONSENT BY BORROWER AND OTHER SIGNERS. In regard to this Note, Borrower and each guarantor: (a) Waive protest, presentment for payment, notice of dishonor, notice of intent to accelerate, and notice of acceleration; (b) Consent to any one or multiple renewals or extensions of time for payment on this Note; (c) Consent to Holder's release of any guarantor, surety, endorser, or co-signer; (d) Consent to the release or substitution of any collateral or any failure by Holder to perfect or continue a security interest in any collateral or any impairment of any collateral; (e) Consent to any modification of the terms of this Note or any instrument securing, guaranteeing, or relating to this Note; (f) Consent to any and all sales, repurchases, and participations of this Note to any person or entity in any amount and waive notice of such sales, repurchases, or participations of this Note; and (g) Consent to Holder's right of set-off as well as any participating Holder's right to set-off. 12. ADDITIONAL COLLATERAL. If Holder at any time deems any portion of the collateral securing this Note to be unsatisfactory because of a decrease or potential decrease in its value, upon demand, Borrower shall furnish such additional collateral or make such payment upon the accrued interest and principal balance of this Note as Holder may request. 13. NO DUTY BY HOLDER. Holder is under no duty to preserve or protect any collateral until Holder is in actual possession of the collateral. Holder shall only be deemed to be in "actual" possession of the collateral when Holder has physical, immediate, and exclusive control over the collateral and has affirmatively accepted such control. 14. APPLICATION OF PAYMENTS. All payments on this Note, including, but not limited to, regular payments or prepayments, received by Holder shall be applied first to costs and expenses, then to accrued interest, and the balance, if any, to principal. No repayment shall excuse or defer Borrower's subsequent payment obligations. 15. JOINT AND SEVERAL. Borrower and any other signers shall be jointly and severally liable under this Note. 16. FINANCIAL STATEMENTS. Until this Note is paid in full, Borrower shall furnish Holder upon any material change in financial or business condition, upon Holder's written request, and in the event of no request, at least annually, current financial statements of the Borrower, which is certified by Borrower and Borrower's accountant to be true and accurate. The requirements of this paragraph shall be in addition to any imposed by any security agreement or other loan documents executed in connection with the Note. 17. NO OBLIGATION TO RENEW. Borrower may repay the entire principal balance of the Note and unpaid interest when due. The Holder is under no obligation to renew or extend the Note or to refinance the Loan at any time. 18. NO DEFENSES. Borrower represents and warrants to Holder that as of the date of this Note, Borrower has no claims or causes of action against the Holder, nor any defenses, set-offs, or counterclaims to this Note or the repayment in full according to the terms hereof, and in consideration of the making hereof or the renewal or extension hereof, Borrower releases all rights or claims whatsoever of Borrower against Holder. 19. RELEASE OF INFORMATION. Borrower authorizes Holder to disclose, without any additional consent, information concerning this Note for any one or more of the following purposes: to complete the transaction contemplated hereby, to verify and disclose the existence and condition of the account for credit reporting purposes, to perfect any security interest, or to collect any money the Holder in good faith believes Borrower owes, to disclose to Holder's attorneys or collection agents, to disclose to Holder's accountants or auditors as part of the review of the Holder's business affairs, to verify the accuracy of any statement made to Holder, as part of the Holder's report to officials of any governmental authority or self-regulatory organization that regulates the business or Holder of its affiliates, for the sale or transfer of the Note or an interest therein, or for any other legitimate business purpose of Holder. 20 GENERAL PROVISIONS. (a) TIME OF THE ESSENCE. Time is of the essence in Borrower's performance of all duties and obligations imposed by this Note. (b) NO WAIVER BY HOLDER. Holder's course of dealing or Holder's forbearance from, or delay in, the exercise of any of Holder's rights, remedies, privileges, or right to insist upon Borrower's strict performance of any provisions contained in this Note or other Loan Documents shall not be construed as a waiver by Holder, unless any such waiver is in writing and signed by Holder. (c) AMENDMENT. The provisions contained in this Note may not be amended except through written amendment signed by Borrower and Holder. (d) GOVERNING LAW. This Note shall be governed by the laws of the State of Arkansas, to the extent that such laws are not preempted by federal laws and regulations. (e) FORUM AND VENUE, In the event of litigation pertaining to this Note, the exclusive forum, venue, and place of jurisdiction shall be in the State of Arkansas, unless otherwise designated in writing by Holder. (f) SUCCESSORS. This Note shall inure to the benefit of and bind the heirs, personal representatives, successors, and assigns of the parties. (g) NUMBER AND GENDER. Whenever used, the singular shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders. (h) PARAGRAPH HEADINGS. The headings at the beginning of each paragraph and each sub-paragraph in this Note are for convenience only and shall not be dispositive in the interpreting or construing this Note or any part thereof. (i) SEVERABILITY. If any provisions of this Note shall be unenforceable or void, then such provision shall be deemed severable from the remaining provisions and shall in no way affect the enforceability of the remaining provisions nor the validity of this Note. (j) BORROWER DEFINED. The term "Borrower" includes each and every person and entity signing this Note as a Borrower, and any co-signers. (k) HOLDER. The term "Holder" shall include any transferee or assignee of Holder or any other holder of this Note. (l) ENTIRE AGREEMENT. This Note, any guaranty agreement, any security agreement, any pledge agreement, any financing statements and any other documents or instruments executed in connection with this Note by Borrower and Smart Choice, or either of them (collectively, the "Loan Documents"), contain all the terms of the agreement among the parties, and no earlier oral statement or agreement has any force or effect. If any of the terms or provisions relating to the indebtedness or the repayment of the indebtedness contained in a security agreement, mortgage or any of the Loan Documents are inconsistent with the terms of the Note, the terms of the Note shall be controlling. If any terms or provisions relating to the collateral contained in any security agreement, mortgage, or other collateral agreement are inconsistent with the terms of the Note, the terms of the security agreement, mortgage or other collateral agreement, shall be controlling. Borrower agrees that Borrower is not relying on any representation or agreement except those contained in the Loan Documents. BORROWER: Eckler Industries, Inc. By: /s/ James Neal Hutchinson, Jr. ---------------------------------- Title: Vice President EX-10.4 3 AMENDMENT TO GUARANTY AGREEMENT AMENDMENT TO GUARANTY AGREEMENT THIS AMENDMENT TO SECURITY AGREEMENT, made and entered into this 23rd day of January, 1998, by and between Eckler Industries, Inc., a Florida corporation ("Borrowers"), and Stephens Inc., an Arkansas corporation ("Holder"), WITNESSETH: WHEREAS, borrower and Holder have entered into a Guaranty Agreement dated as of September 30, 1997 (the "Guaranty Agreement"); WHEREAS, the Holder is funding a loan to the Borrower in the principal amount of $3 million which will be evidenced by a Promissory Note of even date herewith (the "$3,000,000 Note"), WHEREAS, the Borrower and the Holder intend for the Note to be guaranteed under the Guaranty Agreement. NOW THEREFORE, in consideration of the premises and the agreements set forth herein, the parties hereto agree as follows: 1. Obligations. Section 2 of the Guaranty Agreement is hereby amended to provide an additional subsection (g), as follows: (g) The term "Note" in the Guaranty Agreement shall include the $3,000,000 Note and the term "Loan" in the Guaranty Agreement shall include the loan evidence by the $3,000,000 Note. 2. Representations and Warranties. The representations and warranties set forth in the Guaranty Agreement are true and correct as of the date hereof as if made on the date hereof; provided that the Borrower has granted a second lien on the assets of Borrower to the Huntington National Bank ("Huntington") pursuant to that certain Security Agreement dated November 3, 1997, between Borrower and Huntington. 3. Effective Amendment. Except as amended hereby, the Guaranty Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. BORROWER: Eckler Industries, Inc. By:/s/ James Neal Hutchinson, Jr. --------------------------------- Title: Vice President HOLDER: Stephens Inc. By: /s/ Curt Bradbury ---------------------- Title: Chief Operating Officer EX-10.5 4 AMENDMENT TO PLEDGE AND SECURITY AGREEMENT AMENDMENT TO PLEDGE AND SECURITY AGREEMENT THIS AMENDMENT TO PLEDGE AND SECURITY AGREEMENT, made and entered into this 23rd day of January, 1998, by and between Smart Choice Automotive Group, Inc., a Florida corporation ("Pledgor"), and Stephens Inc., an Arkansas corporation ("Creditor"), WITNESSETH: WHEREAS, Pledgor and Creditor have entered into a Pledge and Security Agreement dated as of September 30, 1997 (the "Pledge and Security Agreement"); WHEREAS, the Creditor is funding a loan to Eckler Industries, Inc. ("Eckler"), a subsidiary of the Pledgor, in the principal amount of $3 million which will be evidenced by a Promissory Note of even date herewith (the "$3,000,000 Note"); WHEREAS, the Pledgor and the Creditor intend for the Note to be secured under the Pledge and Security Agreement; NOW THEREFORE, in consideration of the premises and the agreements set forth herein, the parties hereto agree as follows: 1. Obligations. Section 1.4 of the Pledge and Security Agreement is hereby amended to provide in its entirety as follows: 1.4 "Obligations" - all present and future indebtedness and other obligations owing to Creditor, pursuant to (a) that certain Promissory Note (the "Note") dated October 3, 1997 by Eckler to the order of Creditor in the face principal amount of One Million Five Hundred Thousand Dollars ($1,500,000), (b) that certain Promissory Note (the "$3,000,000 Note") by Eckler to the order of Creditor in the face principal amount of Three Million Dollars ($3,000,000), (c) this Agreement, (d) that certain Guaranty Agreement dated September 30, 1997 from Pledgor to Creditor (the "Guaranty"), as amended by that certain Amendment to Guaranty Agreement from Pledgor to Creditor, (e) that certain Security Agreement dated September 30, 1997 from Eckler to Creditor, as amended by that certain Amendment to Security Agreement from Eckler to Creditor (the "Eckler Security Agreement"), or (f) or any of them, and all present and future indebtedness and other obligations owing by Pledgor to Creditor or guaranteed to Creditor by Pledgor in connection with the Note or the $3,000,000 Note, whether or not for the payment of money, whether or not evidenced by any note or other instrument, whether direct or indirect, absolute or contingent, due or to become due, joint or several, primary or secondary, liquidated or unliquidated, secured or unsecured, whether arising before, during, or after the commencement of any case with respect to Borrower or Pledgor under the United States Bankruptcy Code of any similar statute, including interest, fees, charges, expenses, and attorneys' fees chargeable to Pledgor or incurred by Creditor in connection with this Agreement and/or the transaction(s) related thereto. The term "Note" in the Pledge and Security Agreement shall include the $3,000,000 Note. 2. Representations and Warranties. The representations and warranties set forth in the Pledge and Security Agreement are true and correct as of the date hereof as if made on the date hereof. 3. Effect of Amendment. Except as amended hereby, the Pledge and Security Agreement shall remain in full force and effect in accordance with its terms. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. PLEDGOR: SMART CHOICE AUTOMOTIVE GROUP, INC. By: /s/ James Neal Hutchinson, Jr. ---------------------------------- Title: Vice President CREDITOR: STEPHENS INC. By: /s/ Curt Bradbury --------------------- Title: Chief Operating Officer EX-10.9 5 PROMISSORY NOTE BETWEEN FIRST CHOICE AND MANHEIM PROMISSORY NOTE $ 3,750,000 City, State: TITUSVILLE, FL 32780 Date: Month FEBRUARY 24, 1998 FOR VALUE RECEIVED, the undersigned FIRST CHOICE AUTO FINANCE, INC., a FLORIDA corporation ("Borrower"), promises to pay to Manheim Automotive Financial Services, Inc.("Lender"), or order, at its place of business at 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319, Attention: Manager of Operations or at such other place as may be designated in writing by the holder of this Promissory Note ("Note"), so much of the principal sum of THREE MILLION AND SEVEN HUNDRED FIFTY THOUSAND Dollars ($3,750,000), which has been advanced by Lender and remains outstanding pursuant to the terms of a Security Agreement dated as FEBRUARY 24, 1998 between Borrower and Lender (the "Security Agreement"), together with interest on the unpaid principal balance advanced hereunder from the date of the Advance until paid, at a fluctuating interest rate per annum equal to the Index Rate (as hereinafter defined), plus an applicable percentage as set forth below and provided, however, that amounts outstanding with respect to the following types of Advances cannot exceed the limits listed below: Applicable Percentage Rate Types of Advances Amount Over Index Rate - ----------------- ------ --------------- Advances for Inventory Finance Loan $3,750,000 1.5% The initial Advance, all subsequent Advances and all payments made on account of principal may be reflected on monthly statements if provided by Lender to Borrower. The aggregate unpaid principal amount shown on any monthly statement shall be rebuttable presumptive evidence of the principal amount owing and unpaid on this Note. The failure to record the date and amount of any Advance on such monthly statement or provide such monthly statement, shall not, however, limit or otherwise affect the obligations of the Borrower under the Security Agreement or under this Note to repay the principal amount of the Advances together with all interest accruing thereon. "Index Rate" shall mean the rate quoted as the "Prime Rate" in the column entitled "Money Rates" published in The Wall Street Journal (in the event no such rate is published in The Wall Street Journal on such date, the Index Rate shall be the "Prime Rate" shown in such column for the most recent business day preceding the last business day of such month on which such rate was published) or, in the event The Wall Street Journal does not quote a "Prime Rate", the rate quoted as the "Prime Rate" in a publication as Lender may, from time to time, hereafter designate in writing. The Index Rate shall initially be determined by Lender as of the Business Day preceding the date of the Security Agreement and shall remain in effect for the remainder of such calendar month in which such date occurs; thereafter, the Index Rate shall be determined by Lender on the last Business Day of each month and the Interest Rate based on such Index Rate shall be in effect for the following month. Interest shall be calculated on the basis of a 360-day year for actual days elapsed. Principal and interest hereunder shall be due and payable by Borrower on the dates and in the manner as follows: (a) Subject to any payment changes resulting from changes in the Index Rate, Borrower will pay regular monthly installments of interest only, due as of each payment date, commencing on the fifteenth (15th) day of MARCH 1998, with all subsequent payments to be due on the fifteenth (15th) day of each month thereafter or such other dates as may be specified by the Lender; and (b) Any Advance for a Vehicle shall be payable on the earliest of: (i) forty-eight (48) hours from the time of sale or within twenty-four (24) hours from the time Borrower receives payment by or on behalf of the purchaser of such Vehicle; or (ii) the Maturity Date (as defined below) for such Advance; or (iii) the termination of the Security Agreement. (c) Payments of principal required from time to time if the Vehicle is subject to the Lender's curtailment program. The "Maturity Date" for any Advance shall mean the date upon which an Advance is due as determined by the Lender, provided however if no such date is specified by Lender then the advance shall be deemed due upon demand of Lender. Borrower may prepay at any time all or part of the principal balance under this Note without penalty. All principal and interest, costs and expenses due hereunder are payable in lawful money of the United States of America. This Note has been executed and delivered pursuant to the Security Agreement. Terms defined in the Security Agreement and not otherwise defined herein are used herein with the meanings defined for those terms in the Security Agreement. Upon the occurrence of an Event of Default, the entire principal balance outstanding hereunder plus accrued interest shall, at the option of Lender, mature and be immediately due and payable. Any Advance in default shall bear interest at a rate equal to the Interest Rate plus three percent (3%) until paid in full. The obligations under this Note are secured by the Collateral pledged by the Borrower to the Lender pursuant to the Security Agreement. Borrower and all others who may become liable for all or any part of this obligation, hereby agree to be jointly and severally bound, and jointly and severally waive and renounce presentment, protest, demand and notice of dishonor and any and all lack of diligence or delays in collection or endorsement hereof, and expressly consent to any extension of time, release of any party liable for this obligation or any guaranty of this obligation, release of any security which may have been or which may hereafter be granted in connection herewith or any guaranty of this obligation, or any other indulgence or forbearance which may be made without notice to said party and without in any way affecting the liability of such party. Nothing contained herein nor in any transaction related hereto shall be construed or shall so operate either presently or prospectively (a) to require the payment of interest at a rate greater than is now lawful in such case to contract for, but shall require payment of interest only to the extent of such lawful rate or (b) to require the payment or the doing of any act contrary to law; but if any clause or provision herein contained shall otherwise so operate to invalidate this Note and/or the transaction related hereto, in whole or in part, then such clause(s) and provision(s) only shall be held for naught as though not contained herein and the remainder of this Note shall remain operative and in full force and effect. If for any reason interest in excess of the amount as limited in the foregoing paragraph shall have been paid hereunder, whether by reason of acceleration or otherwise, then in that event any such excess interest shall constitute and be treated as a payment of principal hereunder and shall operate to reduce such principal by the amount of such excess, or if in excess of the then principal indebtedness, such excess shall be refunded. The rights and remedies of Lender as provided in this Note or any document securing this Note shall be cumulative and concurrent, and may be pursued singly, successively or together against Borrower, any guarantor of these obligations or any security for the debt evidenced by this Note, at the discretion of Lender. The Borrower agrees that if, and as often as, this Note is placed in the hands of an attorney for collection, to defend or enforce any of the Lender's rights hereunder or under any document securing this Note, whether or not litigation is commenced, Borrower shall pay to Lender its reasonable attorneys' fees, together with all court costs and other expenses which may be incurred or paid by Lender in connection therewith. Failure to exercise any right or option herein given to Lender shall not constitute a waiver of the right to exercise the same at a later time or upon the occurrence of any subsequent event permitting such exercise. This agreement shall be governed by the internal laws of the state of the principal place of business of the Borrower. This Note may not be changed, modified, amended or terminated orally, but may only be changed, modified, amended or terminated by an agreement in writing signed by both Borrower and Lender, except that this paragraph may not be changed, modified, amended or terminated under any circumstance. IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its duly authorized officer as of the date first above written. FIRST CHOICE AUTO FINANCE, INC. a FLORIDA Corporation By: /s/ Richard Todd ----------------------- Name: Richard Todd Title: V.P. Special Projects Acknowledged by: /s/ Richard Todd - ----------------- EX-10.10 6 GUARANTY FROM REGISTRANT IN FAVOR OF MANHEIM CORPORATE GUARANTY This GUARANTY is made and entered as of March 21, 1997 ( the "Effective Date") from SMART CHOICE AUTOMOTIVE GROUP, INC., a FLORIDA corporation, (the "Guarantor") to MANHEIM AUTOMOTIVE FINANCIAL SERVICES, INC. (together with such party's successors and assigns, referred to as "Secured Party"). WITNESSETH: In consideration of any loan or other financial accommodation heretofore or hereafter at any time made or granted to Dealer (as defined below), the Guarantor agrees as follows: 1. DEFINITIONS a. "Dealer" shall mean the entity listed below, including any subsidiaries or affiliated of such entity, whether now in existence or hereinafter established or acquired: FIRST CHOICE AUTO FINANCE, INC., FLORIDA corporation b. "Indebtedness" shall mean any obligation or indebtedness of any kind of Dealer to Secured Party, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, renewed or extended, or now or hereafter existing or become due. 2. GUARANTY a. Guaranty Obligations. The Guarantor hereby unconditionally and absolutely guarantees (i) the full and prompt payment when due, whether by acceleration or otherwise, and at all times hereafter, of all Indebtedness and (ii) the full and prompt performance of all the terms, covenants, conditions and agreements related to the Indebtedness, The Guarantor further agrees to pay all expenses, including without limitation, attorneys' fees and court costs, paid or incurred by Secured Party in endeavoring to collect the Indebtedness, or any part thereof, and in enforcing the Guaranty, plus interest on such amounts at the lesser of 12% per annum or the maximum rate permitted by law. Interest on such amounts paid or incurred by Secured Party shall be computed from the date of payment made by Secured Party and shall be payable on demand. b. Absolute and Unconditional Nature of the Guaranty. The Guarantor acknowledges that this Guaranty is a guaranty of payment and not of collection, and that its obligations hereunder shall be absolute, unconditional and unaffected by: (i) the waiver of the performance or observance by Dealer of any agreement, covenant, term or condition to be performed or observed by Dealer; (ii) the extension of time for the payment of any sums owing or payable with respect to the Indebtedness or the time for performance of any other obligation arising out of the Indebtedness; (iii)the modification, alteration or amendment of any obligation arising out of the Indebtedness; (iv) the failure, delay or omission by Secured Party to enforce , assert or exercise any right, power or remedy in connection with the Indebtedness; (v) the genuineness, validity, or enforceability of the Indebtedness or any document related thereto; (vi) the existence, value or condition of, or failure of Secured Party to perfect its lien against, any security pledged in connection with the Indebtedness; (vii)the release of any security pledged in connection with the Indebtedness or the release, modification, waiver or failure to enforce any other guaranty, pledge or security agreement; (viii)the voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the property, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment or other similar application or proceeding affecting Dealer or any assets of Dealer; or (ix) the release or discharge of Dealer from the performance or observance of any agreements, covenants, terms or conditions in connection with the Indebtedness by operation of law or otherwise. c. Continuing and Unlimited Nature of the Guaranty. The obligation of the Guarantor under this Guaranty shall be continuing and shall cover all Indebtedness existing as of the Effective Date of this Guaranty and Indebtedness existing at the time of termination of this Guaranty. This Guaranty shall be unlimited in amount and shall continue in effect until the Guaranty is terminated pursuant to Section 3 hereof. d. Waivers by Guarantor. The Guarantor hereby expressly waives: (i) notice of the acceptance by Secured Party of this Guaranty; (ii) notice of the existence or creation or non-payment of all or any of the Indebtedness; (iii) presentment, demand, notice of dishonor, protest, and all other notices whatsoever, and (iv) diligence in collection or protection of or realization upon the Indebtedness, or any part thereof, any obligation under this Guaranty or any security for or guaranty or any of the foregoing. e. Authorization. This Guaranty has been expressly authorized by Guarantor's Board of Directors pursuant to a Board of Director's resolution in form and substance satisfactory to Secured Party. f. Enforcement. In no event shall Secured Party have any obligation to proceed against Dealer, any other entity or any security pledged in connection with the Indebtedness before seeking satisfaction from the Guarantor. Secured Party may, at its option, proceed, prior or subsequent to, or simultaneously with, the enforcement of its rights hereunder, to exercise any right or remedy it may have against Dealer, any other entity or any security pledged in connection with the Indebtedness. g. Reinstatement. The Guarantor agrees that if at any time all or any part of any payment theretofore applied by Secured Party to any of the Indebtedness is or must be rescinded or returned, by Secured Party for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Dealer), such Indebtedness shall, for purposes of this Guaranty, to the extent that such payment is or must be rescinded on returned, be deemed to have continued in existence, not withstanding such application by Secured Party, and this Guaranty shall continue to be effective or reinstated, as applicable, as to such Indebtedness, all as though such application by Secured Party had not been made. 3. TERMINATION a. Payment of Indebtedness. This Guaranty shall be terminated upon: (i) the payment by Dealer or the Guarantor, either jointly or severally, of the aggregate amount of Indebtedness outstanding, and (ii) the payment of all obligations by the Guarantor which may be due to Secured Party under this Guaranty. b. Revocation. This Guaranty may be revoked by the Guarantor upon ninety (90) days' written notice to Secured Party, by certified mail, to the address set forth below in Section 5 (c) or at such other address as Secured party may from time to time specify. Such revocation shall in no way terminate or otherwise affect: (i) any obligations of the Guarantor existing on or prior to the effective date of such revocation or (ii) any obligations of the Guarantor arising after the effective date of such revocation with respect to any Indebtedness incurred by Dealer to Secured Party on or before the effective date of such revocation. 4. EVENTS OF DEFAULT Any one or more of the following events shall constitute an Event of Default hereunder: a. If Guarantor fails to make any payment hereunder and such failure shall continue for five (5) days after written notice from Secured Party; b. If Guarantor fails to perform or observe any agreement, covenant, term or condition contained in this Guaranty (other than the monetary obligations described in Section 4(a) above) and such failure shall continue for thirty (30) days after written notice from Secured Party; c. If Guarantor makes an assignment for the benefit of creditors or fails to pay its debts as the same become due and payable; d. If Guarantor petitions or applies to any tribunal for the appointment of a trustee or receiver of the business, estate or assets or of any substantial portion of the business, estate or assets of Guarantor or commences any proceedings relating to Guarantor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; e. If any such petition or application is filed or any such proceedings are commenced against Guarantor and Guarantor by any act indicates its approval thereof, consent thereto or acquiescence therein, or any order is entered appointing any such trustee or receiver, or declaring Guarantor bankrupt or insolvent, or approving the petition in any such proceedings; or f. Any suit or proceeding shall be filed against Dealer or Guarantor, which if adversely determined could, substantially impair the ability of the Guarantor or Dealer to perform any of their obligations with respect to this Guaranty or the Indebtedness, as determined by Secured Party in its sole and absolute discretion. If an Event of Default under this Guaranty shall have occurred, in addition to pursuing any remedies which may be available to Secured Party with respect to the Indebtedness, Secured Party, at its option, may take whatever action at law or in equity Secured Party may deem necessary, regardless of whether Secured Party shall have exercised any of its rights or remedies with respect to any of the Indebtedness, and Secured Party may demand, at its option, that the Guarantor pay forthwith the full amount which would be due and payable hereunder as if all Indebtedness were then due and payable. 5. GENERAL a. Entire Agreement. This Guaranty contains the entire and only agreement between the Guarantor and Secured Party with respect to the guaranty of Indebtedness and any representation, promise, condition or understanding in connection therewith which is not expressed in this Guaranty shall not be binding upon the Guarantor or Secured Party. All prior understandings and agreements related to the guaranty of the Indebtedness shall be superseded by this Guaranty as of the Effective Date. b. Application of Payments; Subrogation. Any amounts received by Secured Party from any source on account of the Indebtedness may be applied by it toward the payment of such of the Indebtedness, and in such order of application, as Secured Party may from time to time elect, Notwithstanding any payments made by or for the account of the Guarantor, the Guarantor shall not be subrogated to any rights of Secured Party until such time as this Guaranty has been terminated in accordance with Section 3(a) above. c. Notices. All notices to the Guarantor shall be forwarded by express mail for overnight delivery to the address set forth below the Guarantor's signature, or such other address as the Guarantor may from time to time specify in writing to Secured Party. All notices to Secured Party shall be forwarded by express mail for overnight delivery ( except for the notice given pursuant to Section 3(b) to the following address: Manheim Automotive Financial Services, Inc., 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319, Attention: Leon L. Lyon, or such other address as Secured Party may specify to the Guarantor in writing. d. Governing Law; Severability. This Guaranty shall be governed by the laws of the state of the principal place of business of Dealer. Wherever possible, each provision of this Guaranty shall be prohibited by or invalid under such law, the remaining provisions of this Guaranty shall remain in full force and effect. e. Successors and Assigns. All guaranties and agreements contained in this Guaranty shall bind the successors and assigns of the Guarantors. f. References to Guarantor. Each reference to Guarantor herein shall be deemed to include the officers, employees and agents of the Guarantor and their respective successors and assigns. g. Rights and Remedies of Secured Party. No delays on the part of Secured Party in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any power or right hereunder or the failure to exercise same in any instance preclude other or further exercise of any other power or right, nor shall Secured Party be liable for exercising or failing to exercise any such power or right. The rights and remedies hereunder are cumulative and not exclusive of any rights or remedies which Secured Party may or will otherwise have h. Financial Statements. Upon Lender's request, Guarantor will provide lender with Guarantor's audited financial statements as certified by Guarantor's independent certified public accountant or such other financial statements and information as Lender may request from time to time. i. Amendments. This Guaranty may not be modified or amended except by a writing duly executed by the Guarantor. Any such modification or amendment must be expressly consented to in writing by Secured Party. WHEREAS, this Guaranty has been executed by the Guarantor as of the Effective Date. Guarantor: SMART CHOICE AUTOMOTIVE GROUP, INC. A FLORIDA corporation By: /s/ JM Barnes -----END PRIVACY-ENHANCED MESSAGE-----