SMART CHOICE AUTOMOTIVE GROUP INC
FORBEARANCE AGREEMENT DATED NOVEMBER 8, 2001
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>3
<FILENAME>d92582ex10-27.txt
<DESCRIPTION>FORBEARANCE AGREEMENT DATED NOVEMBER 8, 2001
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.27



                              FORBEARANCE AGREEMENT

          This Forbearance Agreement ("Agreement") is entered into as of the 8th
day of November, 2001, by FLORIDA FINANCE GROUP, INC. ("Florida Finance"), a
Florida corporation; LIBERTY FINANCE COMPANY ("Liberty"), a Florida corporation;
SMART CHOICE RECEIVABLES HOLDING COMPANY ("Smart Choice Holdings"), a Delaware
corporation; FIRST CHOICE AUTO FINANCE, INC. ("First Choice"), a Florida
corporation (Florida Finance, Liberty, Smart Choice Holdings and First Choice
are referred to herein collectively as the "Florida Finance Borrowers"); PAACO
AUTOMOTIVE GROUP, L.P. ("Paaco"), a Texas limited partnership and successor by
conversion to Paaco Automotive Group, Inc., a Texas corporation; PREMIUM AUTO
ACCEPTANCE CORPORATION ("Paaco Acceptance"), a Texas corporation (Paaco and
Paaco Acceptance are referred to herein collectively as the "Paaco Borrowers");
SMART CHOICE AUTOMOTIVE GROUP, INC. ("Smart Choice"), a Florida corporation; SC
HOLDINGS, INC. ("SC Holdings"), a Florida corporation (Smart Choice and SC
Holdings are referred to herein collectively as the "Guarantors"); and FINOVA
CAPITAL CORPORATION ("Lender"), a Delaware corporation.

                                    RECITALS:

           A. The Florida Finance Borrowers are indebted to Lender, as set forth
(i) in that Second Amended and Restated Loan and Security Agreement (the
"Florida Finance Loan Agreement") dated as of November 9, 1998, as amended by
that Third Amended and Restated Schedule to Second Amended and Restated Loan and
Security Agreement dated as of September 25, 2000, and (ii) in the "Loan
Documents," as defined in the Florida Finance Loan Agreement (such Loan
Documents are referred to in this Agreement as the "Florida Finance Loan
Documents").

           B. The Paaco Borrowers are indebted to Lender, as set forth (i) in
that First Amended and Restated Loan and Security Agreement (the "Paaco Loan
Agreement") dated as of March 8, 1999, as amended by that Third Amended and
Restated Schedule to First Amended and Restated Loan and Security Agreement
dated as of September 25, 2000, and (ii) in the "Loan Documents," as defined in
the Paaco Loan Agreement (such Loan Documents are referred to in this Agreement
as the "Paaco Loan Documents").

           C. Pursuant to that Amended and Restated Guaranty (the "Smart Choice
Guaranty") executed by Smart Choice dated as of November 18, 1999, Smart Choice,
which is the sole shareholder of Florida Finance, SC Holdings and First Choice,
the majority shareholder of Liberty and of Paaco Acceptance, and the sole
limited partner of Paaco, has guaranteed the payment and performance of (i) all
debts and obligations of the Florida Finance Borrowers arising under the Florida
Finance Loan Documents (the "Florida Finance Obligations"), and (ii) all debts
and obligations of the Paaco Borrowers arising under the Paaco Loan Documents
(the "Paaco Obligations") (the Florida Finance Loan Documents and the Paaco Loan
Documents are referred to herein collectively as the "Loan Documents, and the
Florida Finance Obligations and the Paaco Obligations are referred to herein
collectively as the "Obligations").

<PAGE>


                  D. Pursuant to that Amended and Restated Guaranty (the "SC
Holdings Guaranty") executed by SC Holdings dated as of November 18, 1999, SC
Holdings has guaranteed the payment and performance of the Obligations, without
limitation.

                  E. Pursuant to the Florida Finance Loan Documents, FINOVA has
a first priority perfected security interest in the Collateral described therein
(the "Florida Finance Collateral") to secure the Florida Finance Obligations.

                  F. Pursuant to the Paaco Loan Documents, FINOVA has a first
priority perfected security interest in the Collateral described therein (the
"Paaco Collateral") to secure all of the Obligations.

                  G. Material Events of Default exist under the Florida Finance
Loan Agreement, and FINOVA is presently entitled to exercise its remedies
against the Florida Finance Collateral and the Paaco Collateral (collectively
the "Collateral") including, but not limited to, the recovery of all cash
proceeds of pledged chattel paper and other financial instruments, which
recovery would shut down the operations of the Florida Finance Borrowers and the
Paaco Borrowers (collectively the "Borrowers"), as they have no other identified
source of operating cash.

                  H. The fair market value of the Florida Finance Collateral is
less than the amount of the Florida Finance Obligations.

                  I. The fair market value of the Paaco Collateral may exceed
the amount of the Paaco Obligations, but the combined value of the Paaco
Collateral and the Florida Finance Collateral is less than the total amount of
the Obligations.

                  J. The Florida Finance Borrowers, the Paaco Borrowers, and the
Guarantors (collectively the "Obligors") have offered certain accommodations to
Lender as an inducement for Lender to forbear in the immediate liquidation of
all of the Collateral in order to permit a more orderly winding up of the
affairs of the Obligors.

                  K. Lender is willing to conditionally forbear in its exercise
of remedies, on the terms and conditions set forth in this Agreement.

                  NOW, THEREFORE, in consideration of the mutual agreements set
forth herein, and for other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

                  1. Definitions. As used below in this Agreement, (i) terms
defined in the recitals above shall have the meanings therein set forth, and
(ii) the following capitalized terms shall have the meanings assigned below:

         "Affiliate" means, with respect to any Person, another Person who (i)
owns an equity interest in the first Person, of any degree, (ii) is owned, as to
equity interest, by the first Person, in any degree, (iii) Controls the first
Person, (iv) is Controlled by the first Person, or (v) is Controlled by a Person
who also Controls the first Person.


                                      - 2 -
<PAGE>


         "Borrower Parties" means the Obligors and their respective
predecessors, successors and assigns and their present and previous agents,
attorneys, representatives, Affiliates, officers, directors, shareholders and
each of them.

         "Claims" means any and all accounts, covenants, agreements,
obligations, claims, debts, liabilities, offsets, demands, costs, expenses,
actions or causes of action of every nature, character and description, whether
arising at law or equity or under statute, regulation or otherwise, and whether
liquidated or unliquidated, contingent or noncontingent, known or unknown,
suspected or unsuspected.

         "Control" means the ability to substantially direct the policies of a
Person, whether directly or indirectly, and whether such influence exists by
right or by economic compulsion.

         "Forbearance Period" means the period commencing on the date hereof and
terminating on the earlier of sixty (60) days from the date hereof or a
Termination Event.

         "Interim Paaco Payments" means regular payments to Lender from the
Paaco Borrowers in the amount that would otherwise have become due under the
Paaco Loan Documents if the Paaco Obligations had not been accelerated.

         "Lender Parties" means Lender, its participants, predecessors,
successors and assigns and their present and previous agents, attorneys,
representatives, Affiliates, officers, directors, and each of them.

         "Permitted Events of Default" means the Events of Default arising under
the Loan Documents arising from (i) the failure of the Florida Finance Borrowers
to make payments as required by the Florida Finance Loan Documents or to
maintain their solvency, (ii) all other breaches of covenants, warranties and
representations respecting the Florida Finance Borrowers that necessarily arise
from the Events of Default described in subsection (i) (but specifically not
including any Event of Default arising from the commencement of any case under
any chapter of the Bankruptcy Code), (iii) Events of Default arising under the
Paaco Loan Documents arising from the foregoing Events of Default respecting the
Florida Finance Borrowers and their common guarantors, and (iv) the failure of
the Obligors to make the payment of principal, interest and expenses due upon
the acceleration of the maturity of the Obligations.

         "Person" means any natural person and any legal entity with the ability
to enter into contracts.

         "Termination Event" means the occurrence of any of (i) the breach of
any warranty or representation made to Lender under this Agreement, (ii) any
Obligor's failure to comply strictly with all covenants and obligations under
this Agreement, or (iii) the existence of any Event of Default under the Loan
Documents other than the Permitted Events of Default.

                  2. Recitals. The Obligors warrant and represent that the
matters stated in the Recitals of this Agreement are true.


                                      - 3 -
<PAGE>


                  3. Florida Finance Borrowers' Affirmation of Documents. The
Florida Finance Borrowers acknowledge, warrant and represent that (i) pursuant
to the Florida Finance Loan Documents, their obligation to repay the Florida
Finance Obligations is absolute and unconditional, and there exists no right of
deduction, setoff, recoupment, counterclaim or defense of any nature whatsoever
to payment of the Florida Finance Obligations that has not been released herein,
(ii) the Permitted Events of Default arising under the Florida Finance Loan
Documents are valid, material and continuing Events of Default, (iii) this
Agreement confirms the acceleration of the maturity of the Florida Finance
Obligations, which are now presently due and payable in full, and (iv) the
Florida Finance Loan Documents are valid and enforceable against the Florida
Finance Borrowers in accordance with their terms (subject to principles of
equity and laws applicable to the rights of creditors generally, including
bankruptcy laws) and grant Lender valid and perfected security interests in the
Florida Finance Collateral with the priority required by the Florida Finance
Loan Documents, except as provided in Schedule 3 hereto.

                  4. Paaco Borrowers' Affirmation of Documents. The Paaco
Borrowers acknowledge, warrant and represent that (i) pursuant to the Paaco Loan
Documents, their obligation to repay the Paaco Obligations is absolute and
unconditional, and there exists no right of deduction, setoff, recoupment,
counterclaim or defense of any nature whatsoever to payment of the Paaco
Obligations that has not been released herein, (ii) the Permitted Events of
Default arising under the Paaco Loan Documents are valid, material and
continuing Events of Default, (iii) this Agreement confirms the acceleration of
the maturity of the Paaco Obligations, which are presently due and payable in
full, and (iv) the Paaco Loan Documents are valid and enforceable against the
Paaco Borrowers in accordance with their terms (subject to principles of equity
and laws applicable to the rights of creditors generally, including bankruptcy
laws) and grant Lender valid and perfected security interests in the Paaco
Collateral with the priority required by the Paaco Florida Finance Loan
Documents, except as provided in Schedule 4 hereto.

                  5. Guarantors' Affirmation of Documents. Guarantors
acknowledge, warrant and represent that (i) pursuant to their respective
Guaranties, Guarantors' obligations to repay the Obligations are absolute and
unconditional and there exists no right of deduction, setoff, recoupment,
counterclaim or defense of any nature whatsoever to payment of the Obligations
that has not been released herein, (ii) the Permitted Events of Default are
valid, material and continuing Events of Default under the Loan Documents, (iii)
this Agreement confirms the acceleration of the maturity of the Obligations,
which are presently due and payable in full, and (iv) the Loan Documents
executed by Guarantors are valid and enforceable against Guarantors in
accordance with their terms (subject to principles of equity and laws applicable
to the rights of creditors generally, including bankruptcy laws).

                  6. Lender's Conditional Agreement of Forbearance. Subject to
the conditions stated in this Agreement, Lender agrees to forbear in the
commencement of any collection proceedings under the Loan Documents and in the
exercise of any repossession rights, collection rights or other remedies against
the Collateral during the Forbearance Period, except for the remedies
specifically permitted under this Agreement. Upon the expiration or termination
of the Forbearance Period, Lender shall be entitled to exercise all such
remedies to the fullest


                                     - 4 -
<PAGE>


extent permitted under the Loan Documents and applicable law, without hindrance
or delay and without further notice to the Obligors, and any right to further
notice or delay is hereby waived.

         7. Interim Payments. During the Forbearance Period, the Paaco Borrowers
shall timely pay the Interim Payments, time being of the essence. The Interim
Payments shall be applied in accordance with the Loan Documents as received by
Lender.

         8. Liquidation of Florida Finance Collateral.

                  (a) Status of Florida Finance Borrowers. The Obligors warrant
and represent to Lender that (i) on a consolidated basis, the Florida Finance
Borrowers have been losing money on operations for at least all of 2001 and
their continued operation would only serve to further erode the Florida Finance
Collateral, (ii) although the gross amount of the Inventory and the Receivables
(as such capitalized terms are defined in the Florida Finance Loan Agreement)
owned by the Florida Finance Borrowers exceeds the principal amount of the
Florida Finance Obligations, appropriate deductions to the receivables amount
due to the "precomputed" method of carrying their receivables (which is a
customary accounting method in this market) and the reasonable expectations of
collections from the Receivables, given their high-risk market segment and
prevailing economic conditions, the value of the Florida Finance Collateral is,
by any commercially reasonable analysis, substantially less than the amount of
the Florida Finance Obligations, and (iv) the Florida Finance Borrowers have not
in the one (1)-year period preceding the date hereof made any payments or
transfers to any Person outside the ordinary course of business other than in
sales of assets to third parties who are not Obligors for commercially
reasonable consideration.

                  (b) Operations of Florida Finance Borrowers. Effective
immediately, Lender shall commence the exercise of its rights to collect and
enforce Receivables owned by the Florida Finance Borrowers and to repossess
Inventory and other tangible Florida Finance Collateral. The Florida Finance
Borrowers shall assist Lender in making this transition by providing reports,
information, access to personnel and other reasonable assistance. The Florida
Finance Borrowers shall also immediately begin winding down their operations in
anticipation of the disposition of all Florida Finance Collateral at a public
foreclosure sale scheduled to be held by Lender on November 9, 2001 (the
"Foreclosure Sale"). The Florida Finance Borrowers shall consult with Lender and
its liquidation agent as to the proper means for conducting this transition,
including the termination of personnel in a manner that will minimize expenses
but permit an orderly transition of the duties of servicing the receivables and
otherwise managing the Florida Finance Collateral as to preserve its value.
While Lender or its liquidation agent may elect in their sole discretion to hire
some former employees of the Florida Finance Borrowers, neither Lender nor its
liquidation agent shall be obligated to engage any employees of the Florida
Finance Borrowers on any basis, and none of their vacation pay, years of service
or other accruals shall be recognized by Lender or its liquidation agent. Until
the later to occur of the successful foreclosure sale of the Florida Finance
Collateral or the completion to Lender's satisfaction of the transition of
control of the Florida Finance Collateral, no Obligor shall commence or
encourage, and each Obligor will take all reasonable measures to prevent, the
filing of any petition under any chapter of the Bankruptcy Code with respect to
any Obligor. Thereafter, should it become necessary to an orderly completion of
the liquidation of the assets of


                                     - 5 -
<PAGE>


the Florida Finance Borrowers, any Obligor may sponsor or encourage such a
filing; provided, however, in any such proceeding (whenever filed), no Obligor
shall challenge or encourage the challenge of the validity or amount of the
Obligations, Lender's right to retain any payments or collections received, or
the attachment, perfection or priority of any security interest securing the
Obligations.

                  (c) Limited Use of Cash Proceeds. Notwithstanding the
existence of Events of Default under the Florida Finance Loan Agreement, and as
an inducement to cause the Obligors to cooperate in the preservation of the
value of Lender's Collateral, Lender agrees that, during the Forbearance Period,
the proceeds of receipts and collections of receivables held by the Florida
Finance Borrowers and the proceeds of inventory sales undertaken in the usual
manner by the Florida Finance Borrowers (including, but not limited to, cash
proceeds on hand) may be used by the Florida Finance Borrowers (but only to the
extent reasonable and necessary) for the purposes of (i) paying the usual
payroll wages and taxes, including payment upon termination for any accrued
vacation time, with respect to employees of the Florida Finance Borrowers and
Smart Choice, (ii) paying lessors and vendors for current accruals of
liabilities to the extent that the continued service of such lessors and vendors
are necessary to the orderly winding up of the affairs of the Florida Finance
Borrowers, (iii) arranging the due termination of all employee benefit plans as
they affect employees of the Florida Finance Borrowers, and (iv) otherwise
paying such reasonable and necessary expenses of winding down the operations of
the Florida Finance Borrowers as Lender may approve in writing in its sole
discretion, it being understood that permitted expenses shall not include the
payment of previously existing debts generally or any other expenditure that is
not directly necessary for the orderly termination of operations by the Florida
Finance Borrowers. The Florida Finance Borrowers have proposed to Lender and
Lender has approved a separate budget of the amount of liquidation and
transition expenses. The Obligors acknowledge that, but for this Agreement,
Lender would have the present and absolute right to possession of all such cash
proceeds, and that any use of the cash proceeds of any Florida Finance
Collateral other than the specific uses permitted herein would constitute a
wrongful conversion thereof. Lender's consent to the limited use of cash
proceeds of Florida Finance Collateral shall terminate upon any Obligor's
becoming a debtor in a case under any chapter of the Bankruptcy Code.

                  (d) Transition of Control of Florida Finance Collateral. The
Florida Finance Borrowers shall immediately commence the sharing of all
information with Lender that is reasonably necessary for the liquidation of the
Florida Finance Collateral. The actual control of bank accounts containing
proceeds of Florida Finance Collateral shall be transitioned to Lender as soon
as practicable, and Lender shall release to the Florida Finance Borrowers funds
to the extent that they are needed for the payment of expenses permitted under
this Agreement.

                  (e) Foreclosure Sale of Florida Finance Collateral. Lender
intends that the Foreclosure Sale shall be conducted following the publication
of two (2) public notices thereof (November 4 and November 7) in the Orlando
Sentinel, which publications are hereby approved by all of the Obligors as
commercially reasonable means of advertisement of the sale. Without restricting
or prescribing in any way the manner or amount of bids that Lender may submit,
and without passing judgment on the sufficiency of any lesser amount as a
commercially reasonable bid, the Obligors further agree that they would regard a
bid at the Foreclosure Sale of


                                     - 6 -
<PAGE>


$55,000,000 to be a commercially reasonable price for the Florida Finance
Collateral. The Obligors acknowledge as commercially reasonable terms of sale
that the Foreclosure Sale may be conducted by telephone from any location as
long as all prospective bidders are provided access to the conference call; that
the foreclosure bill of sale and assignments(s) that would issue would disclaim
all warranties; and that bidders may be required to pre-qualify as to their
financial capability to tender a bid.

                  (f) Control of Florida Finance Borrowers. The management of
the Florida Finance Borrowers shall continue to be the responsibility of the
Florida Finance Borrowers' directors and officers and Lender has not undertaken
by this Agreement any right to control or interfere with the operations of the
Florida Finance Borrowers, but Lender has only acted to limit the disposition of
the Florida Finance Collateral, including its proceeds. Without limiting the
foregoing, the Florida Finance Borrowers are free to deal with their assets that
are not Florida Finance Collateral as they may wish, subject only to the already
existing covenants of the Florida Finance Loan Documents.

                  (g) Further Assistance Regarding Sales Taxes. Obligors shall
provide reasonable assistance to Lender, if it is the successful purchaser at
the Foreclosure Sale, respecting any mechanism by which Lender could obtain
sales tax refunds on account of repossessions of vehicles included in the
Florida Finance Collateral. It is the intention of the parties that the
purchaser at the Foreclosure Sale shall acquire all such present and future
rights to tax refunds to the fullest possible extent under applicable law.

         9. Option for Purchase of Smart Choice Stock. As further inducement to
cause Lender to enter into this Agreement, Smart Choice hereby grants to Lender
an option (the "Smart Choice Stock Option") to purchase up to all of Smart
Choice's remaining authorized but unissued and unreserved common stock (which
Smart Choice warrants and represents to be in excess of 38,000,000 shares, and
which shares shall be reserved for issuance to Lender upon the execution of this
Agreement) at the price of thirty cents ($.30) per share, to be paid through the
forgiveness of Florida Finance Obligations, which forgiveness shall be effective
for the benefit of Smart Choice as guarantor of the Florida Finance Obligations.
Smart Choice shall have no right of indemnity, exoneration, subrogation or other
right against the Florida Finance Borrowers on account of the issuance of stock
in satisfaction thereof, and any such right is hereby waived. Lender may
exercise the Smart Choice Stock Option in full or in part at any time and from
time to time by written notice to Smart Choice given within one hundred twenty
(120) days of the date of this Agreement (or, if any legal proceeding stays the
ability of Lender to exercise the Smart Choice Stock Option within the intended
option period, within thirty (30) days after such restrictions have been finally
removed, if such date would be later than the intended expiration). The Smart
Choice Stock Option is fully effective as of the date hereof, all necessary
approvals having been finally obtained. Upon receipt of a purchase election from
Lender, Smart Choice shall promptly (and in any event within five (5) days)
issue the stock so purchased, which shall be fully paid and nonassessable and
free and clear of all encumbrances or legends, except for a legend in customary
form reflecting that the stock has not been registered under any applicable
securities laws. Lender's right to exercise the Smart Choice Stock Option shall
be suspended upon Lender's exercise of the Paaco Option (as defined below) and
shall terminate upon Lender's successful closing under the Paaco Option.


                                     - 7 -
<PAGE>


         10. Option for Purchase of Paaco Equity Interests.

                  (a) As a further inducement to cause Lender to enter into this
Agreement and to satisfy the Smart Choice Deficiency (as defined herein), and
subject to the conditions stated below in this Section, Smart Choice hereby
grants to Lender an option (the "Paaco Option") to purchase, after the
Foreclosure Sale, all of (i) the limited partner interests of Paaco, (ii) the
membership interests of Paaco Holdings, LLC, a Delaware limited liability
company and the sole general partner of Paaco, and (iii) the issued and
outstanding stock of Paaco Acceptance (items (i) through (iii) are collectively
referred to as the "Paaco Equity Interests") at a price equal to the remaining
deficiency of the Florida Finance Obligations (the "Smart Choice Deficiency").
Lender may exercise the Paaco Option in full only at any time by written notice
to Smart Choice given after the date of the Foreclosure Sale and within one
hundred twenty (120) days of the date of this Agreement (or, if any legal
proceeding stays the ability of Lender to exercise the Paaco Option within the
intended option period, within thirty (30) days after such restrictions have
been finally removed, if such date would be later than the intended expiration).
Upon receipt of a purchase election from Lender, Smart Choice shall promptly
(and in any event within five (5) days) issue the Paaco Equity Interests, which
shall be fully paid and nonassessable and free and clear of all encumbrances or
legends, except for a legend in customary form reflecting that the Paaco Equity
Interests have not been registered under any applicable securities laws. The
Obligors warrant and represent that the issuers of the Paaco Equity Interests do
not have, and shall not have at the time of sale to Lender, any outstanding
warrants or other rights for the issuance of additional equity interests under
any circumstances.

                  (b) Smart Choice's obligation to perform under the Paaco
Option shall be subject to (i) its full compliance with all federal securities
laws and obtaining shareholder approval for the sale (which Smart Choice agrees
to seek in good faith upon Lender's exercise of the Paaco Option, and which
Smart Choice expects to finally obtain within thirty (30) days in the absence of
unforeseen difficulties), and (ii) obtaining an independent appraisal from a
qualified firm confirming that the value of the Paaco Equity Interests is not
greater than the amount of the Florida Finance Deficiency that is to be
satisfied by the transfer of the Paaco Equity Interests. The full satisfaction
of the Smart Choice Deficiency by the exercise of the Paaco Option shall be
effective against all the Obligors, whether liable as guarantor or coborrower;
provided, however, the Obligors shall warrant and represent to Lender at the
closing of the purchase that current financial statements for the Paaco
Borrowers delivered to Lender set forth all assets and liabilities known to
them.

                  (c) The closing of the purchase of the Paaco Equity Interests
would be evidenced by customary documents of assignment and deliveries,
including warranties of title.

                  (d) To enable Lender to perform its due diligence regarding
the prospect of exercising the Paaco Option, the Obligors shall offer reasonable
assistance to Lender and shall provide Lender with reasonable access to the
Paaco Borrowers' books and records and shall allow Lender's representatives to
meet with employees, officers and directors of the Paaco Borrowers.


                                     - 8 -
<PAGE>


                  (e) The management of the Paaco Borrowers shall continue to be
the responsibility of their directors and officers and Lender has not undertaken
by this Agreement any right to control or interfere with the operations of the
Paaco Borrowers.

         11. Operation of the Paaco Borrowers. From the date hereof until the
Termination Date or the earlier purchase by Lender of the Paaco Equity
Interests, the Paaco Borrowers shall operate in the ordinary course of business
in all respects. The Paaco Borrowers shall not pay any additional amounts with
respect to debt owed to Crown Group, Inc. unless made in accordance with an
Amended and Restated Subordination Agreement approved by Lender.

         12. Capacity of the Obligors. The Obligors warrant and represent that
they are and shall remain duly organized business organizations in good standing
under the laws of the respective states of their incorporation (as disclosed in
the recitals hereto) and are and shall remain duly qualified to do business in
each other state in which qualification is necessary.

         13. No Conflicting Law or Agreement. The Obligors warrant and represent
that their execution, delivery and performance of this Agreement do not
constitute a breach of or default under, and will not violate or conflict with,
any provisions of the constituent documents of any Obligor; of any contract,
financing agreement, lease, or other agreement to which any Obligor is a party
or by which its properties may be affected; or any law, regulation, judgment,
order or decree to which any Obligor is subject or by which its properties may
be affected; nor will the same result in the creation or imposition of any
encumbrance upon any properties of any Obligor, other than those in favor of
Lender.

         14. No Consent Required. Each of the Obligors and Lender warrant and
represent that their respective execution, delivery, and performance of this
Agreement do not require the consent or approval of or the giving of notice to
any person or entity except for those consents which have been duly and finally
obtained and are in full force and effect or which are expressly referenced in
this Agreement.

         15. Conditions to Closing. Concurrently with the execution and delivery
hereof, the Obligors shall deliver the following additional documents to Lender,
in form and substance acceptable to Lender and its counsel, as conditions to the
effectiveness of this Agreement:

                  (a) Certificate of existence or of good standing, as
available, issued by the Secretary of State for the domicile of each Obligor.

                  (b) Certificates from the Secretaries of each Obligor
certifying the adoption of resolutions by the Board of Directors of each Obligor
to approve the execution, delivery and performance of this Agreement and the
incumbency of officers.

                  (c) Opinion letter of outside counsel to the Obligors
addressing whether the obligors exist and have duly authorized, executed and
delivered this Agreement.


                                     - 9 -
<PAGE>


         16. Bankruptcy. In the event that any Obligor's property or any portion
thereof or any interest therein becomes property of any bankruptcy estate or
subject to any state or federal insolvency proceeding, then Lender shall
immediately become entitled, in addition to all other relief to which Lender may
be entitled under this Agreement, to obtain an order from the Bankruptcy Court
or other appropriate court granting immediate relief from the automatic stay
pursuant to Section 362 of the Bankruptcy Code (or any analogous stay under any
other such law) as to permit Lender to pursue its rights and remedies against
any such Obligor and all other rights and remedies of Lender at law and in
equity under applicable state law. In connection with such an order, no Obligor
shall contend or allege in any pleading or petition filed in any court
proceeding that Lender does not have sufficient grounds for relief from the
automatic stay unless Lender has failed to comply with its obligations under
this Agreement.

         17. Unconditional Full Release of All Claims and Defenses. In
consideration of Lender's execution of this Agreement, the sufficiency of which
is acknowledged, and excepting only the contractual obligations respecting
future performance by Lender arising under the Loan Documents and this
Agreement, the Obligors hereby release and forever discharge the Lender Parties
of and from any and all Claims that any Obligor may have against any Lender
Party as of the execution of this Agreement. The Obligors further agree that
they shall forever refrain and forbear from commencing, instituting or
prosecuting any lawsuit, action, or other proceeding, whether judicial,
administrative or otherwise, or otherwise attempting to collect or enforce, any
such released Claim and agree to indemnify, defend (with counsel satisfactory to
Lender) and hold harmless the Lender Parties against any and all loss,
liability, claim or expense, including attorneys' fees, that any of them might
incur as a result of any breach of this Section by any Borrower Party or the
assertion of any Claim or defense that exists as of the date of this Agreement
by any Borrower Party. The Obligors further waive any presently existing
defenses against the payment and performance of all obligations (of every
nature, character and description) to the Lender Parties under the Loan
Documents.

         18. No Alienation of Claims.

                  (a) The Obligors warrant and represent to Lender that no
Obligor has granted or purported to grant to any other person or entity any
interest whatsoever in any Claim, as security or otherwise, and that their
execution hereof does not require the consent of or notice to any third party in
order to be fully effective as to any Claim that may have existed in favor of
any Obligor at any time.

                  (b) Lender warrants and represents to the Obligors that no
Lender has granted or purported to grant to any other person or entity any
interest whatsoever in any Claim, as security or otherwise, and that Lender's
execution hereof does not require the consent of or notice to any third party in
order to be fully effective as to any Claim that may have existed in favor of
any Lender at any time.

         19. Valid Consideration; Binding Agreement.

                  (a) The Obligors warrant, represent and acknowledge that
absent this Agreement Lender is not obligated to the Obligors to forbear in its
exercise of remedies; that Lender has agreed to forbear in reliance upon the
binding effect, validity and enforceability of


                                     - 10 -
<PAGE>


this Agreement; that this Agreement has been executed and delivered by the
Obligors for adequate consideration and value under all applicable laws; and
that this Agreement is valid, binding and enforceable in accordance with its
terms.

                  (b) Lender warrants, represents and acknowledges that this
Agreement has been executed and delivered by Lender for adequate consideration
and value under all applicable laws and that this Agreement is valid, binding
and enforceable in accordance with its terms.

         20. Notices. All notices, demands, and requests which may be given or
which are required to be given by either party to the other, and any exercise of
a right of termination provided by this Agreement, shall be in writing and shall
be deemed effective when either: (1) personally delivered to the intended
recipient; (2) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (3)
delivered in person to the address set forth below for the party to which the
notice was given; (4) deposited into the custody of a nationally-recognized
overnight delivery service such as Federal Express Corporation, Emery, or
Purolator, addressed to such party at the address specified below; or (5) sent
by facsimile, telegram, or telex, provided that receipt for such facsimile,
telegram, or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above. Notices shall be
effective on the date of delivery or receipt or, if delivery is not accepted, on
the earlier of the date that delivery is refused or three (3) days after the
date the notice is mailed. For purposes of this Section, the addresses of the
parties for all notices are as follows (unless changes by similar notice in
writing are given by the particular person whose address is to be changed):

                  If to Lender:         Finova Capital Corporation
                                        4800 N. Scottsdale Boulevard
                                        Scottsdale, AZ  85251
                                        Attention: John B. Burtchaell, Jr.
                                        Fax #:480/636-6667

                  With a copy to:       Boult, Cummings, Conners & Berry, PLC
                                        Suite 1600
                                        414 Union Street
                                        Nashville, TN 37219
                                        Attention: John E. Murdock III
                                        Fax #: 615/252-6359

                  If to Guarantors
                  or the Florida Finance
                  Borrowers:            1555 N. Semoran Avenue
                                        Winter Park, Florida 32792
                                        Attention: James E. Ernst, President
                                        Fax #: 407/673-3214


                                     - 11 -
<PAGE>



                  If to the Paaco
                  Borrowers:             PAACO Automotive Group, L.P.
                                         2915 Alouette Drive
                                         Grand Prairie, Texas 75052
                                         Attention:  Larry Lange, President
                                         Fax #:  972-206-7133

         21. Construction of Agreement. Except as expressly provided herein, the
Loan Documents shall remain in full force and effect in accordance with their
respective terms, and this Agreement shall not be construed to (i) impair the
validity, perfection, or priority of any security interest granted therein, or
(ii) waive or impair any rights, powers, or remedies of Lender under the Loan
Documents. This Agreement has been reviewed fully by all parties and shall not
be construed against any party as author. All periods of limitations specified
by statute applicable to actions by the Obligors and all defenses of laches
available to the Obligors are hereby tolled and otherwise suspended.

         22. Voluntary Agreement. Each of the Obligors and Lender warrant and
represent that they are represented by legal counsel of their choice; have
investigated fully their alternatives to the execution and performance of this
Agreement; have had ample time to review this Agreement and consult with their
counsel; are fully aware of the terms contained in this Agreement; and have
knowingly, voluntarily and without coercion or duress of any kind entered into
this Agreement and the documents executed in connection with this Agreement.

         23. CONSENT TO JURISDICTION; EXCLUSIVE VENUE. THE PARTIES HERETO AGREE
TO JURISDICTION AND VENUE ELECTIONS SET FORTH IN THE LOAN AGREEMENT RESPECTING
ALL MATTERS ARISING FROM OR RELATED TO THIS AGREEMENT.

         24. Not Partners; No Third Party Beneficiaries. Nothing contained
herein or in any related document shall be deemed to render Lender a partner of
any Obligor for any purpose. This Agreement has been executed for the sole
benefit of Lender and the Obligors and there are no third party beneficiaries
hereof.

         25. Indulgence Not Waiver. Lender's indulgence in any other departure
from the terms of this Agreement shall not prejudice Lender's right to demand
strict compliance with this Agreement.

         26. Assignment. This Agreement shall be binding upon and inure to the
benefit of the respective heirs, successors and assigns of the Obligors and
Lender, except that the Obligors may not assign any rights or delegate any
obligations arising hereunder without the prior written consent of Lender. Any
attempted assignment or delegation without the required prior consent shall be
void.

         27. Entire Agreement. This Agreement and the other written agreements
among the parties represent the entire agreement between the parties concerning
the subject matter hereof, and all oral discussions and prior agreements are
merged herein. In the event of an


                                     - 12 -
<PAGE>


inconsistency between this Agreement and the provisions of the Loan Documents,
the provisions of this Agreement shall control.

         28. Amendment and Waiver in Writing. No provision of this Agreement can
be amended or waived, except by a statement in writing signed by the party
against which enforcement of the amendment or waiver is sought.

         29. Severability. Should any provision of this Agreement be invalid or
unenforceable for any reason, the remaining provisions hereof shall remain in
full effect.

         30. APPLICABLE LAW. THE VALIDITY, CONSTRUCTION AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE DETERMINED ACCORDING TO THE SUBSTANTIVE LAWS OF ARIZONA
WITHOUT REGARD TO CONFLICTS PRINCIPLES.

         31. Gender and Number. Words used herein indicating gender or number
shall be read as context may require.

         32. Captions Not Controlling. Captions and headings have been included
in this Agreement for the convenience of the parties, and shall not be construed
as affecting the content of the respective sections.

         33. WAIVER OF JURY TRIAL. THE OBLIGORS AND LENDER HEREBY KNOWINGLY AND
VOLUNTARILY WAIVE ANY RIGHT TO A TRIAL BY JURY WITH REGARD TO ANY ACTION,
PROCEEDINGS, CLAIMS OR COUNTERCLAIMS, WHETHER IN CONTRACT OR IN TORT, AT LAW OR
IN EQUITY, OF ANY TYPE OR NATURE WHATSOEVER ARISING UNDER OR CONCERNING THIS
AGREEMENT OR THE LOAN DOCUMENTS.

         34. Joint and Several. All warranties, representations and undertakings
of the Obligors or other collective groups under this Agreement are made and
undertaken jointly and severally.

            [The remainder of this page is intentionally left blank]



                                     - 13 -
<PAGE>


Executed as of the date first written above.




                                             FINOVA CAPITAL CORPORATION


                                             By:
                                                -----------------------------

                                             Title:
                                                   --------------------------



                                             FLORIDA FINANCE GROUP INC.


                                             By:
                                                -----------------------------

                                             Title:
                                                   --------------------------



                                             LIBERTY FINANCE COMPANY


                                             By:
                                                -----------------------------

                                             Title:
                                                   --------------------------



                                             SMART CHOICE RECEIVABLES
                                             HOLDING COMPANY


                                             By:
                                                -----------------------------

                                             Title:
                                                   --------------------------

              [Signature page to Forbearance Agreement - continued]


                                     - 14 -
<PAGE>

                                             FIRST CHOICE AUTO FINANCE INC.


                                             By:
                                                -----------------------------

                                             Title:
                                                   --------------------------



                                             PAACO AUTOMOTIVE GROUP, L.P.


                                                   By: PAACO HOLDINGS, LLC,

                                                       General Partner

                                             By: /s/ LARRY LANGE
                                                -----------------------------

                                             Title: Larry Lange, Manager
                                                   --------------------------


                                             PREMIUM AUTO ACCEPTANCE
                                             CORPORATION


                                             By: /s/ LARRY LANGE
                                                -----------------------------

                                             Title: Larry Lange, President
                                                   --------------------------





                                             SMART CHOICE AUTOMOTIVE GROUP,
                                             INC.


                                             By:
                                                -----------------------------

                                             Title:
                                                   --------------------------



              [Signature page to Forbearance Agreement - continued]



                                     - 15 -
<PAGE>



                                             SC HOLDINGS, INC.


                                             By:
                                                -----------------------------

                                             Title:
                                                   --------------------------







              [Signature page to Forbearance Agreement - continued]



                                     - 16 -
<PAGE>


                                   SCHEDULE 3


<Table>
<Caption>

                                                             DATE/LOCATION FILED;
DEBTOR                          SECURED PARTY                FILE NO.                     COLLATERAL
--------------------------      --------------------------   --------------------         ---------------------------
<S>                             <C>                          <C>                          <C>
First Choice Auto Finance,      225 N. Military Corp.        6/2/97                       All Used Motor Vehicle
Inc.                            d/b/a Miracle Mile Motors    Florida SOS                  Inventory located at 225
                                                             #970000184222                N. Military Trail, West
                                                                                          Palm Beach, Florida

First Choice Auto Finance,      Orix Credit Alliance, Inc.   8/27/97                      Automotive Equipment on
Inc.                                                         Florida SOS                  LEASE
                                                             #970000193085

First Choice Auto Finance,      Kendall Motor Oil            8/3/98                       Various Oil-Change
Inc.                                                         Florida SOS                  Equipment
                                                             #980000072420

First Choice Auto Finance,      Automotive Warehouse of      4/8/98                       Automobile replacement
Inc.                            Lakeland, Inc.               Florida SOS                  parts sold by Secured
                                                             #980000076194                Party to Debtor



First Choice Auto Finance,      Navistar Financial           1/31/00                      1999 Vulcan 19 Ft. Steel
Inc.                            Corporation                  Florida SOS                  Carrier
                                                             #200000026173

First Choice Auto Finance,      Paccar Financial Corp.       2/21/00                      2000 Peterbilt 330 Tractor
Inc.                                                         Florida SOS
                                                             #200000043902

First Choice AutoFinance        Navistar Financial           4/3/00                       2000 Chevron 4 car carrier
                                Corporation                  Florida SOS
                                                             #200000078145

First Choice AutoFinance        Navistar Financial           7/24/00                      2000 Chevron Series 20 4
                                Corporation                  Florida SOS                  Car
                                                             #20000170017
</Table>



<PAGE>



                                   SCHEDULE 4


                                      None.

</TEXT>
</DOCUMENT>
