SMART CHOICE AUTOMOTIVE GROUP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 28, 1999
TO THE SHAREHOLDERS OF SMART CHOICE AUTOMOTIVE GROUP, INC.
Notice is hereby given that the annual meeting of shareholders (the "Annual
Meeting") of Smart Choice Automotive Group, Inc., a Florida corporation (the
"Company"), will be held at the Company's corporate office located at 5200 South
Washington Avenue, Titusville, Florida 32780 on Monday, June 28, 1999 at 8:00
a.m. (EDT), to consider and vote upon the following proposals, all of which are
more completely set forth in the accompanying Proxy Statement:
1. To approve specific stock option grants of an aggregate 190,000 shares of
Common Stock to certain employees of the Company.
2. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on May 17, 1998
as the record date (the "Record Date") for the determination of stockholders of
the Company entitled to notice of, and to vote at, the Annual Meeting. Only
stockholders of record at the close of business on the Record Date are entitled
to notice of, and to vote at, the Annual Meeting.
By order of the Board of Directors,
/s/ GARY R. SMITH
------------------------
Gary R. Smith, President
Titusville, Florida
Date: May 24, 1999
A PROXY CARD AND THE ANNUAL REPORT OF THE COMPANY FOR 1998 ARE ENCLOSED. IT
IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH DOES NOT
REQUIRE POSTAGE IN THE UNITED STATES.
SMART CHOICE AUTOMOTIVE GROUP, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 28, 1999
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Smart Choice Automotive Group, Inc., a Florida
corporation (the "Company"), of proxies from the holders of the Company's Common
Stock, par value $.01 per share ("Common Stock"), for use at the annual meeting
of shareholders (the "Annual Meeting") of the Company to be held at 8:00 a.m.
(EDT), on Monday, June 28, 1999, or at any adjournment(s) or postponement(s)
thereof, pursuant to the foregoing Notice of Annual Meeting of Shareholders.
The approximate date that this Proxy Statement and the enclosed proxy card
are first being sent to shareholders is May 27, 1999. Shareholders should review
the information provided herein in conjunction with the Company's 1999 Annual
Report, which accompanies this Proxy Statement. The Company's principal
executive offices are located at 5200 South Washington Avenue, Titusville,
Florida 32780, and its telephone number is (407) 269-9680.
PURPOSES OF THE MEETING
At the Annual Meeting the Company's shareholders will consider and vote
upon the following matters:
1. To approve specific stock option grants of an aggregate 190,000 shares of
Common Stock to certain employees of the Company.
2. To transact such other business as may properly come before the meeting.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth below)
will be voted FOR approval of the grants of stock options to certain of the
Company's employees described above in Proposal 1. In the event a shareholder
specifies a different choice by means of the enclosed proxy, his or her shares
will be voted in accordance with the specification so made. The Board does not
know of any other matters that may be brought before the Annual Meeting. In the
event that any other matter should come before the Annual Meeting, the persons
named in the enclosed proxy will have discretionary authority to vote all
proxies not marked to the contrary with respect to such matters in accordance
with their best judgment.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business on
May 17, 1999 as the record date (the "Record Date") for the Annual Meeting. Only
holders of record of the outstanding shares of Common Stock at the close of
business on the Record Date are entitled to notice of, and to vote at, the
Annual Meeting or any adjournments thereof. As of the close of business on the
Record Date, the Company had issued and outstanding 7,393,458 shares of Common
Stock. The presence, in person or by proxy, of the holders of a majority of the
issued and outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum to transact business.
The affirmative vote of a majority of the votes cast is required to approve
Proposal 1.
The Florida Business Corporation Act (the "FBCA") provides matters are
approved if the votes cast in favor of the action exceed the votes cast against
the action (unless the matter is one for which the FBCA, or other applicable
laws, or the Company's Articles of Incorporation require a greater vote).
Therefore, under the FBCA, abstentions and broker non-votes have no legal
effect.
A list of shareholders entitled to vote at the Annual Meeting will be
available at the Company's offices at 5200 South Washington Avenue, Titusville,
Florida 32780 for a period of ten days prior to the Annual Meeting and at the
Annual Meeting itself for examination by any shareholder.
A SHAREHOLDER WHO SUBMITS A PROXY ON THE ACCOMPANYING PROXY CARD HAS THE
POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS USE BY DELIVERING A WRITTEN NOTICE
TO THE SECRETARY OF THE COMPANY AT ITS OFFICES, BY EXECUTING A LATER-DATED PROXY
OR BY ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON. UNLESS AUTHORITY IS
WITHHELD, PROXIES THAT ARE PROPERLY EXECUTED WILL BE VOTED FOR THE PURPOSES SET
FORTH THEREON.
MANAGEMENT
The following table sets forth the names, ages, and positions with the
Company of all of the executive officers and directors of the Company. Also set
forth below is information as to the principal occupation and business
experience for each person in the table.
NAME AGE POSITION AND OFFICE
---- --- -------------------
Robert J. Abrahams 72 Chairman of the Board and Director
Gary R. Smith 46 President, Chief Executive Officer, and Director
Ronald W. Anderson 52 Executive Vice President and Chief Operating Officer
Joseph A. Alvarez 43 Executive Vice President
Robert J. Downing 41 Senior Vice President and Chief Legal Officer
Lewis H. Berman 59 Director
John W. Holden, Jr. 57 Director
Craig Macnab 42 Director
Robert J. Abrahams has been Chairman of the Board and a director of the
Company since 1997. For the past ten years, Mr. Abrahams has been self employed
as an independent consultant in the financial services industry. Mr. Abrahams
also serves on the Board of Directors of one public company, HMI Industries,
Inc. and six private companies, five of which are independent consumer finance
companies and one is a life insurance company. Prior to that time, Mr. Abrahams
spent 28 years with Heller Financial Corporation ("Heller"), an international
financial services company, in charge of its consumer finance activities. Mr.
Abrahams held various titles at Heller, including Executive Vice President from
1985 to 1988. Mr. Abrahams serves as a member of the Executive Committee and
Compensation Committee of the Board of Directors of the Company.
Gary R. Smith has been the President, Chief Executive Officer, and a
director of the Company since 1997. For the past six years, since 1990, Mr.
Smith has been the President, Chief Executive Officer, and through January 1997,
owner of Florida Finance Group, Inc. ("FFG"), an automobile finance company. Mr.
Smith has also served since 1981 as the President, Chief Executive Officer, and
through January 1997, owner of Suncoast Auto Brokers, Inc. ("SAB"), an
automobile dealership, and Suncoast Auto Brokers Enterprises, Inc., a used car
dealership ("SABE"). On January 28, 1997, the Company acquired FFG, SAB and
SABE. Mr. Smith served as President of the Florida Independent Automobile
Dealers Association in 1993 and currently serves as a member of the
association's Board of Directors. Mr. Smith also serves as a member of the Board
of Directors of the National Independent Automobile Dealers Association. Mr.
Smith is a member of the Executive Committee of the Board of Directors of the
Company.
Ronald W. Anderson joined the Company as Executive Vice President and Chief
Operating Officer in 1997. From June 1996 to March 1997 he was Vice President of
Marketing for North American Mortgage Insurance Group. From 1989 through June
1996, he was Executive Vice President for operations of the Riverside Group, a
diversified holding company, the business of which included real estate,
insurance, and retail building supplies.
Joseph A. Alvarez has served as Executive Vice President of the Company
since 1997, in which capacity he is in charge of the automobile sales activities
of the Company. Prior to joining the Company, Mr. Alvarez was general manager of
the following factory franchised new car dealerships: Lokey Automobile Group
(1996-1997); Carlisle Motors (1994-1996); and Dimmitt Cadillac (1988-1994).
Robert J. Downing joined the Company as Senior Vice President and Chief
Legal Officer in 1998. From 1990 to present, he has been the principal
shareholder in Downing & Associates, a law firm in Miami, Florida and New
Mexico. During that time, Mr. Downing also acted as of counsel to Cohen & Cohen,
P.A. a Santa Fe, New Mexico law firm (1994 through 1997) and as of counsel to
Montgomery & Andrews, P.A., an Albuquerque, New Mexico law firm (1991 through
1992).
John W. Holden, Jr. was appointed as a director of the Company in 1998. Mr.
Holden has been President and Chief Executive Officer of Pioneer Credit Company,
a consumer finance company, since 1974.
Craig Macnab was appointed as a director of the Company in 1997. From
January 1997 to March 1999, Mr. Macnab was President of Tandem Capital, which
provides growth capital to small, rapidly growing public companies with market
capitalization up to $100 million. Mr. Macnab also serves on the Board of
Directors of Environmental Tectonics Corporation and JDN Realty Corp. From 1991
until 1993 he was a partner in J.C. Bradford, a securities firm. Mr. Macnab also
serves on the Compensation Committee and Audit Committee of the Board.
Lewis H. Berman was appointed a director of the Company in 1998 and
currently serves as a member of the Audit Committee of the Board of Directors.
Mr. Berman, a certified public accountant, founded Berman, Hopkins, Wright,
Arnold, LaHam LLP, an accounting and business consulting firm with offices in
Merritt Island and Melbourne, Florida, in 1964. Mr. Berman retired as managing
partner of such firm in January 1996.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During 1998, the Board of Directors held nine meetings. During 1998, each
director attended at least 75% of the meetings of the Board of Directors and of
the committees on which such director served as a member. The Company's Board of
Directors has a standing Compensation Committee, Executive Committee and Audit
Committee. The Compensation Committee, which held two meetings in 1998, makes
recommendations to the Board of Directors regarding salaries, incentives and
other forms of compensation for executive officers, directors, and employees of
the Company. At present, the Compensation Committee's members are Robert J.
Abrahams, Craig Macnab (Chair) and John W. Holden, Jr. The Executive Committee,
which held two meetings in 1998, exercises all of the authority of the Board of
Directors, when the Board of Directors is not session. At present, the members
of the Executive Committee are Robert J. Abrahams (Chair), Gary R. Smith and
Craig Macnab. The Audit Committee, which held two meetings in 1998, reviews the
Company's accounting practices, internal accounting controls, and financial
results, and oversees the engagement of the Company's independent auditors. At
present, the members of the Audit Committee are Craig Macnab and Lewis H. Berman
(Chair).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the SEC and NASDAQ initial reports of
beneficial ownership and reports of changes of beneficial ownership of Common
Stock of the Company. Such persons are also required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. The
Company believes, based solely on a review of the copies of such forms furnished
to the Company, that during 1998 such individuals complied with all Section
16(a) filing requirements applicable to them, (i) except that the award of
options to purchase 50,000 shares of Common Stock to each of Ronald W. Anderson,
Joseph A. Alvarez, Joseph E. Mohr and Robert J. Downing pursuant to the 1998
Executive Incentive Compensation Plan, which awards were approved by the
Company's shareholders on June 24, 1998, were not reported on a timely basis;
(ii) Gerald C. Parker did not report on a timely basis dispositions of Common
Stock in July of 1998; and (iii) Thomas E. Conlan did not report on a timely
basis dispositions of Common Stock in May, June and July of 1998. To the
knowledge of the Company appropriate reports of such transactions have been
filed with the SEC.
EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and long-term
compensation for services rendered in all capacities to the Company during the
1998, 1997 and 1996 fiscal years of the Chief Executive Officer of the Company
and the other four most highly compensated executive officers of the Company who
were serving as executive officers at December 31, 1998 (the "Named Executive
Officers"). None of the Named Executive Officers served for any of 1996, or all
of 1997. Therefore, salary amounts are not reflected for 1996. Salary amounts
for 1997 do not reflect salary for a full year.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation for
services in all capacities for the 1998 and 1997 fiscal years of the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company as of December 31, 1998.
Name And FISCAL LONG TERM COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS SECURITIES UNDERLYING OPTIONS (1)
------------------ ---- ------ ----- -----------------------------
Robert J. Abrahams 1998 $120,000 $10,000 50,050
Chairman of the Board 1997 110,819 -- --
Gary R. Smith 1998 282,692 -- 50,050
President and Chief Executive Officer 1997 217,851 -- 151,250
Ronald W. Anderson
Executive Vice President and
Chief 1998 188,461 -- 50,050
Operating Officer 1997 115,328 -- 41,500
Joseph E. Mohr
Former Executive Vice President and Chief 1998 150,000 (2) -- 50,050
Financial Officer 1997 37,073 -- 15,000
Joseph A. Alvarez 1998 150,000 $50,000 (3) 50,050
Executive Vice President 1997 113,010 $50,000 (4) 12,500
- ------------------
(1) The amounts shown in this column represent outstanding stock options
granted as compensation. See "Executive Compensation-Stock Option Plans."
(2) Mr. Mohr resigned from the Company on February 26, 1999.
(3) Mr. Alvarez's employment agreement provides for a bonus payment at the end
of each fiscal year of $50,000, which the Company paid in 1999.
(4) Mr. Alvarez's employment agreement provides for a bonus payment at the end
of each fiscal year of $50,000, which the Company paid in 1998.
OPTION GRANTS TABLE FOR FISCAL 1998
The following table sets forth information regarding stock options granted
during 1998 to the Named Executive Officers.
Potential Realizable
Value at Assumed
Annual Rates of
Number of Percent of Stock Price
Securities Total Options Market Appreciation for
Underlying Granted to Exercise Price at Option Term (1)
Options Employees in Price Per Date of Expiration -----------------------
Granted (#) Fiscal Year Share ($/SH) Grant Date 5% 10%
----------- ----------- ------------ -------- ---------- ------- ---------
Robert J. Abrahams 50,000 6% $3.38 $3.38 12/1/03 $ 46,692 $ 103,176
25 .003% $9.50 $9.50 7/1/01 $ 37 $ 78
25 .003% $7.75 $7.75 4/3/01 $ 30 $ 64
Gary R. Smith 50,000 6% $3.38 $3.38 12/1/03 $ 46,692 $ 103,176
25 .003% $9.50 $9.50 7/1/01 $ 37 $ 78
25 .003% $7.75 $7.75 4/3/01 $ 30 $ 64
Ronald W. Anderson 50,000 6% $9.50 $9.50 7/1/03 $ 131,234 $ 289,992
25 .003% $9.50 $9.50 7/1/01 $ 37 $ 78
25 .003% $7.75 $7.75 4/3/01 $ 30 $ 64
Joseph E. Mohr 50,000 6% $9.50 $9.50 7/1/03 $ 131,234 $ 289,992
25 .003% $9.50 $9.50 7/1/01 $ 37 $ 78
25 .003% $7.75 $7.75 4/3/01 $ 30 $ 64
Joseph A. Alvarez 50,000 6% $9.50 $9.50 7/1/03 $ 131,234 $ 289,992
25 .003% $9.50 $9.50 7/1/01 $ 37 $ 78
25 .003% $7.75 $7.75 4/3/01 $ 30 $ 64
- -----------------------
(1) Gains are reported net of the option exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation. Actual gains, if any, on stock option exercises are dependent
on the future performance of the Common Stock and overall stock market
conditions. The amounts reflected in this table will not necessarily be
achieved.
AGGREGATED OPTION EXERCISES AND DECEMBER 31, 1998 OPTION VALUES
The following table sets forth information concerning stock options
exercised by the Named Executive Officers in 1998 and the value of unexercised
stock options at December 31, 1998 for the Named Executive Officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
NO. SHARES UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT DECEMBER 31, 1998 DECEMBER 31, 1998
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE (1) EXERCISABLE/UNEXERCISABLE (2)(3)
---- ----------- -------- ----------------------------- --------------------------------
Robert J. Abrahams -- -- 50 / 50,050 $ 0 / $ 34,000
Gary R. Smith 50 $ 3.00 50,050 / 50,050 $ 0 / $ 34,000
Ronald W. Anderson -- $ -- 27,600 / 50,050 $ 0 / 0
Joseph E. Mohr 23,513 $ -0- 15,050 / 50,050 $ 0 / 0
Joseph A. Alvarez -- -- 12,550 / 50,050 $ 0 / 0
- -----------------
(1) All options are to purchase shares of Common Stock. Options listed as
"exercisable" consist of options granted on or prior to December 31, 1998
which became exercisable on or prior to December 31, 1998.
(2) Based on the $4.06 closing price of a share of Common Stock on December 31,
1998.
(3) Based on the $1.19 closing price of a share of Common Stock on May 11,
1999, options listed as unexercised in-the-money options at December 31,
1998 are all out-of-the-money at May 11, 1999.
1998 EXECUTIVE INCENTIVE COMPENSATION PLAN
Following the recommendation of the Board of Directors, the shareholders of
the Company approved the 1998 Executive Incentive Compensation Plan (the "1998
Plan") at the Annual Meeting held on June 24, 1998. The terms of the 1998 Plan
provide for grants of stock options, stock appreciation rights ("SARs"),
restricted stock, deferred stock, other stock-related awards and performance or
annual incentive awards that may be settled in cash, stock or other property
(collectively "Awards"). The effective date of the 1998 Plan is April 30, 1998
(the "Effective Date"). Under the 1998 Plan, the total number of shares of
Common Stock that may be subject to the granting of Awards is 750,000 shares,
plus the number of shares with respect to which Awards were previously granted
under the 1998 Plan that terminated without being exercised, and the number of
shares that are surrendered in payment of Awards, or any tax withholding
requirements. Awards with respect to 597,500 shares have been made under the
1998 Plan since the Effective Date.
EMPLOYMENT AGREEMENTS
In 1997, the Company entered into employment agreements with Messrs.
Abrahams, Smith, Alvarez, Anderson and Mohr providing for initial base salaries
of $120,000, $250,000, $150,000, $150,000 and $150,000, respectively. Mr.
Smith's contract was amended to provide for a base salary of $300,000 and Mr.
Anderson's contract was amended to provide for a base salary of $200,000. Mr.
Alvarez's employment agreement provides for a bonus payment at the end of each
fiscal year of $50,000. The initial term of Mr. Smith's contract is five years
and the others are for three. Each of the employment contracts is renewable,
unless notice of termination is given prior to the renewal period. The salary
for each executive is subject to annual review, and each executive is to be
provided an automobile allowance ranging from $500 to $700 monthly or in lieu
thereof, use of an automobile. In addition, the employment contracts provide for
continuation of the executive's base salary and benefits for the remainder of
the contract period if the employee is terminated without cause prior to the
expiration of the contract or in the event of a change of ownership of the
Company. The contracts also contain confidentiality and non-compete covenants.
DIRECTOR COMPENSATION
The Company compensates its directors who are not employees by granting
them options to purchase shares of the Company's Common Stock. In 1998, the
non-employee directors were each granted five-year options for 6,250 shares of
Common Stock exercisable at $5.00 per share. The non-employee directors are
reimbursed their travel expenses to attend meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998 the Company's Board of Directors with the advice of the
Compensation Committee determined compensation matters during 1998. No executive
officer of the Company served as a member of the Compensation Committee or Board
of Directors of another entity which had an executive officer who served on the
Company's Board of Directors or Compensation Committee during the fiscal year
ended December 31, 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee reviews and makes recommendations to
the Company's Board of Directors regarding the Company's executive compensation
program. In that connection the Compensation Committee reviews each of the
elements of the executive compensation program of the Company and periodically
assesses the effectiveness and competitiveness of the program in total. The
Compensation Committee has furnished the following report on executive
compensation.
The Company's compensation program for executive officers is primarily
comprised of base salary, bonus, and short and long-term incentives in the form
of stock option grants. Executives also participate in various other benefit
plans, including medical and 401(k) plans, versions of which are generally
available to all employees of the Company.
The Company's philosophy is to pay base salaries to executives at levels
that enable the Company to attract, motivate and retain highly qualified
executives. In addition, the Company gives bonuses as a reward for performance
based upon individual performance and overall Company financial results. Stock
option grants are intended to result in no reward if the stock price does not
appreciate, but may provide substantial reward to executives as stockholders
benefit from stock price appreciation.
BASE SALARY AND BONUSES. Each Company executive receives a base salary,
which when aggregated with his bonus, is intended to be competitive with
similarly situated executives in the Company's industry. The Company targets
base pay at the level required to attract and retain highly qualified
executives. In determining salaries, individual experience and performance and
specific needs particular to the Company are taken into account.
In addition to base salary, executives are eligible to receive an annual
bonus. The Board of Directors approved the Company's Executive Incentive Bonus
Plan which would provide for cash bonuses to executives based on the Company's
and the executive's 1998 performance. No bonuses were paid to executive officers
in respect of fiscal year 1998. The amount of bonus and the performance criteria
vary with the position and role of the executive within the Company, although
bonuses are significantly tied to the Company's financial performance.
STOCK, OPTIONS AND OTHER AWARDS. The Company believes that it is important
for executives to have an equity stake in the Company and, toward this end, has
made option grants to key executives from time to time. Option grants have taken
into account the level of awards granted to executives at companies in the
Company's industry, the awards granted to other executives within the Company
and the individual officer's specific role at the Company. At the 1998 Annual
Meeting of Shareholders, the shareholders approved a proposal for the 1998 Plan
which includes, among other things, provisions for grants of stock, stock
options, stock appreciation rights, restricted and deferred stock, bonus stock,
dividend equivalents, awards in lieu of cash obligations, and other stock-based
awards, to executive officers.
A plan committee comprised of directors who are not employees of the
Company administer the 1998 Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION. Gary R. Smith was the owner and
President of the used car dealerships and finance company that were acquired by
the Company in the Eckler/Smart Choice merger. The terms of Mr. Smith's
employment were primarily negotiated with him in connection with the merger
transaction. Mr. Smith's five year employment agreement with the Company, as
amended, provides for a salary of $300,000 per year with no increase in salary
level. Mr. Smith did not receive a bonus in respect of fiscal year 1998. The
Compensation Committee believes that Mr. Smith's salary is at or below the
compensation paid to Chief Executive Officers of comparable, publicly-held
companies.
Robert J. Abrahams
John W. Holden, Jr.
Craig Macnab
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the Nasdaq Composite Index and the Company's peer
group index. The Company's peer group consists of Ugly Duckling Corporation and
Litha Motors, Inc. The stock performance graph assumes $100 was invested on
January 1, 1998 and measures the return thereon at various points based on the
closing price of the Common Stock on the dates indicated.
SMART CHOICE PEER NASDAQ
MEASUREMENT PERIOD AUTOMOTIVE GROUP, INC. GROUP COMPOSITE
------------------ ---------------------- ----- ---------
1/29/97 100 100 100
3/31/97 89 86 90
6/30/97 79 75 106
9/30/97 102 83 124
12/31/97 68 66 116
1/2/98 100 100 100
3/31/98 106 119 116
6/30/98 121 105 120
9/30/98 51 70 107
12/31/98 48 91 139
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the number of
shares of Common Stock beneficially owned by (i) each director of the Company,
(ii) the Named Executive Officers, (iii) all directors and executive officers of
the Company as a group, and (iv) each shareholder known by the Company to be a
beneficial owner of more than 5% of the Company's voting securities as of May
11, 1999. The Company believes that except as otherwise noted, each person named
has sole investment and voting power with respect to the shares of Common Stock
indicated as beneficially owned by such person.
SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1)(2) PERCENTAGE OF CLASS(2)
------------------------ ------------------------ ----------------------
EXECUTIVE OFFICERS AND DIRECTORS
- --------------------------------
Robert J. Abrahams (3) 193,345 2.9%
Gary R. Smith (4) 737,569 11.0%
Ronald W. Anderson (5) 87,663 1.3%
Joseph A. Alvarez (6) 102,650 1.5%
Robert J. Downing ( 7 ) 85,050 1.3%
Craig Macnab (8) 34,400 *
John W. Holden, Jr. (9) 7,750 *
Berman, Lewis H. (10) 26,250 *
All executive officers and directors as a
group (8 persons) 1,274,677 19.1%
CERTAIN SHAREHOLDERS (11)
- -------------------------
Ralph H. Eckler (12) 793,300 11.8%
Thomas E. Conlan (13) 784,001 11.8%
Sirrom Capital Corporation (14) 960,172 14.4%
Gary R. Smith and Gerald C. Parker,
Trustees (15) 380,012 5.7%
Bankers Insurance Group, Inc. (16) 133,172 1.9%
Bankers Life Insurance Company (17) 398,560 5.9%
- -----------------------
*Less than 1%.
(1) For purposes of calculating beneficial ownership percentages, 6,676,545
shares of Common Stock were deemed outstanding.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired within 60 days from the date set forth above through the exercise
of any option, warrant, or right. Shares of Common Stock subject to
options, warrants, or rights which are currently exercisable or exercisable
within 60 days are deemed outstanding for computing the percentage of the
person holding such options, warrants, or rights but are not deemed
outstanding for computing the percentage of any other person.
(3) The shares shown represent (i) 23,000 shares owned directly; (ii) 161,400
shares underlying presently exercisable rights to acquire Common Stock; and
(iii) 8,945 shares underlying convertible preferred stock.
(4) The shares shown represent (i) 257,457 shares owned directly; and (ii)
100,100 shares underlying presently exercisable rights to acquire Common
Stock. See Note (15) for information as to Mr. Smith's beneficial ownership
of shares of Common Stock held by trusts as to which Mr. Smith and Gerald
C. Parker are co-trustees.
(5) The shares shown represent (i) 10,000 shares owned directly; and (ii)
77,663 shares underlying presently exercisable rights to acquire Common
Stock.
(6) The shares shown underlie presently exercisable rights to acquire Common
Stock, of which 52,600 are presently exercisable.
(7) The shares shown underlie presently exercisable rights to acquire Common
Stock, of which 35,000 are presently exercisable.
(8) The shares shown represent (i) 14,750 shares owned directly; (ii) 6,250
shares underlying presently exercisable rights to acquire Common Stock; and
(iii) 13,400 shares underlying convertible preferred stock.
(9) The shares shown represent (i) 1,500 shares owned directly; and (ii) 6,250
shares underlying presently exercisable rights to acquire Common Stock.
(10) The shares shown represent (I) 20,000 shares owned directly; and (ii) 6,250
shares underlying presently exercisable rights to acquire Common Stock.
(11) Each of these shareholders, together with Gary R. Smith, Ralph H. Eckler,
and Gerald C. Parker, beneficially own 5% or more of the outstanding Common
Stock.
(12) The shares shown represent (i) 593,300 shares owned directly, (ii) 160,000
shares underlying presently exercisable rights to acquire Common Stock; and
(iii) 40,000 shares underlying a presently exercisable option which Mr.
Eckler holds jointly with Thomas E. Conlan and Gerald C. Parker.
(13) The shares shown represent (i) 513,995 shares owned directly; (ii) 40,000
shares underlying a presently exercisable option which Mr. Conlan holds
jointly with Gerald C. Parker and Ralph H. Eckler; (iii) 37,500 shares
underlying presently exercisable rights to acquire Common Stock; (iv) 2,500
shares held in a trust of which Mr. Conlan is a co-trustee with Gerald C.
Parker; and (v) 190,006 shares held in two trusts of which Mr. Conlan is
the beneficiary and Gary R. Smith and Gerald C. Parker are co-trustees of
these two trusts. Thomas E. Conlan's address is 1081 Fairview Lane, Singer
Island, Florida 33404.
(14) These shares shown represent shares underlying presently exercisable rights
to acquire Common Stock. The address of Sirrom Capital Corporation is 500
Church Street, Suite 200, Nashville, Tennessee 37219.
(15) Gerald C. Parker and Gary R. Smith are co-trustees of four trusts which
hold these shares and share voting and investment power as to these shares.
(16) The shares shown represent shares issued to Bankers Insurance Group, Inc.
upon conversion of convertible notes on March 29, 1999.
(17) The shares shown represent shares issued to Bankers Life Insurance Company
upon conversion of convertible notes on March 29, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Gary R. Smith leases the Company real property in Pinellas Park, Florida on
which the Company operates a used car dealership. The lease term expires in 1999
and has three one-year renewals. The monthly rental for the property is $3,500
plus taxes.
APPROVAL OF OPTION GRANTS TO SALES
EMPLOYEES (PROPOSAL NO. 1)
OPTIONS GRANTED
The Board of Directors has approved and recommends to the stockholders that
they approve specific stock option grants in 1999 to certain employees of the
Company. Certain rules of the Nasdaq SmallCap market, which first became
applicable to the Company in February, 1998, require that such grants of stock
options be submitted to the Company's shareholders for approval.
In 1999 the Company granted, subject to shareholder approval, options to
purchase Common Stock at an exercise price of $2.09 per share which are
exercisable for a period of five years from the date of grant. The exercise
price equals the closing price of the Common Stock on March 18, 1999, the date
of grant. The closing price of the Common Stock was $1.19 per share on May 11,
1999, so all of the options are presently out-of-the-money. These options vest
annually over a three year period if the employee remains employed by the
Company at such time. The Board of Directors granted these options to provide
certain of the Company's employees an economic incentive to meet or exceed the
Company's goals. These options were granted to the individuals listed below as
follows:
NAME OF EMPLOYEE NO. OF SHARES UNDERLYING OPTIONS
Joseph A. Alvarez 50,000
Charles Bonanno 50,000
Thomas A. Holodak 30,000
Larry Ulmer 30,000
Robert Warren 30,000
------
TOTAL: 190,000
=======
VOTE REQUIRED
The affirmative vote of a majority of the votes cast is required to approve
Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO
APPROVE THESE STOCK OPTION GRANTS.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman, LLP currently serves as the independent certified public
accountants for the Company. Representatives of BDO Seidman, LLP will be present
at the Annual Meeting and will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the Company's
2000 Annual Meeting of Shareholders must be received by the President of the
Company for possible inclusion in the Company's Proxy Statement, and notice of
meeting relating to that meeting by January 22, 2000. Shareholder proposals must
be made in compliance with applicable legal requirements promulgated by the
Securities and Exchange Commission and be furnished to the President by
certified mail, return receipt requested.
COSTS OF SOLICITATION
The entire cost of solicitation of proxies by the Board of Directors will
be borne by the Company. In addition, to the use of the mails, proxies may be
solicited by personal interview, facsimile, telephone and telegram by directors,
officers and employees of the Company. The Company expects to reimburse brokers
or other persons for their reasonable out-of-pocket expenses in forwarding proxy
material to beneficial owners.
YOU ARE URGED TO SIGN AND RETURN YOUR PROXY PROMPTLY TO MAKE CERTAIN YOUR
SHARES WILL BE VOTED AT THE 1999 ANNUAL MEETING. FOR YOUR CONVENIENCE, A RETURN
ENVELOPE IS ENCLOSED.
BY ORDER OF THE BOARD OF DIRECTORS
Gary R. Smith, President
Titusville, Florida
May 24, 1999
PROXY FOR COMMON STOCK
SMART CHOICE AUTOMOTIVE GROUP, INC. SHAREHOLDER PROXY
THIS SHAREHOLDER PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS JUNE 28, 1999
The undersigned hereby appoints Gary R. Smith and Robert J. Downing and any
of them, as proxies, each with the power to appoint his substitute, to
represent, and vote all shares of Common Stock of and on behalf of the
undersigned as designated on the reverse side at the Annual Meeting of
Shareholders of Smart Choice Automotive Group, Inc. to be held June 28, 1999,
and any adjournments thereof, with all powers the undersigned would possess if
personally present and voting at such meeting.
Please mark your votes
as indicated in this example [ X ]
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
1. PROPOSAL TO APPROVE GRANT OF STOCK OPTIONS TO CERTAIN EMPLOYEES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is indicated, the Proxy
will be voted FOR Proposal 1.
PLEASE MARK ON THIS SIDE; THEN SIGN, DATE
AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE
(Continued from other side)
ANNUAL MEETING OF SHAREHOLDERS
SMART CHOICE AUTOMOTIVE GROUP, INC.
to be held at:
5200 S. Washington Avenue
Titusville, Florida 32780
June 28, 1999
8:00 A.M., Local Time
This Proxy, when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is indicated, the Proxy
will be voted FOR Proposal 1. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come before the annual meeting.
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
Date: , 1999
--------------------
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Signature
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Signature if held jointly
PLEASE SIGN EXACTLY AS NAME(S) APPEAR(S) HEREON. If shares are held in the
name of two or more persons, all must sign. When signing as Attorney, Executor,
Administrator, Personal Representative, Trustee, or Guardian, give full title as
such. If signer is a corporation, sign full corporate name by duly authorized
officer.