<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NATIONAL AUTO CREDIT, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant) Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
<PAGE> 2
(1) Amount Previously Paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3) Filing Party:
- -------------------------------------------------------------------------------
(4) Date Filed:
- -------------------------------------------------------------------------------
<PAGE> 3
[LOGO]
NATIONAL AUTO CREDIT, INC.
30000 AURORA ROAD
SOLON, OHIO 44139
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To
Be Held On September 15, 1999
To Our Stockholders:
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
National Auto Credit, Inc. (the "Company") will be held at the offices of
Willkie Farr & Gallagher, 787 Seventh Avenue, 38th Floor, New York, New York
10019 on September 15, 1999, at 2:00 p.m., New York City time, for the following
purposes:
1. To elect two (2) directors to serve for terms of three (3) years;
2. To ratify the selection of Grant Thornton LLP as the independent
auditors of the Company for the fiscal year ending January 31, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
All stockholders are cordially invited to attend the annual meeting,
although only stockholders of record at the close of business on August 2, 1999,
are entitled to notice of and to vote at the meeting or any and all adjournments
thereof.
This notice and related proxy materials are being first mailed on or
about August 23, 1999.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ James J. McNamara
----------------------------------
James J. McNamara
Chairman of the Board
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE
MEETING. YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING.
IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON
IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
<PAGE> 4
IF YOU OWN YOUR SHARES THROUGH BANK OR BROKERAGE ACCOUNTS, YOU SHOULD
BRING A WRITTEN STATEMENT FROM THE BANK OR BROKER VERIFYING THAT YOU ARE THE
BENEFICIAL OWNER OF YOUR SHARES OR OTHER APPROPRIATE PROOF OF YOUR OWNERSHIP IF
YOU WISH TO ATTEND THE MEETING.
Dated: August 23, 1999
Solon, Ohio
-2-
<PAGE> 5
[LOGO]
NATIONAL AUTO CREDIT, INC.
30000 AURORA ROAD
SOLON, OHIO 44139
---------------------------------
PROXY STATEMENT
This Proxy Statement is being furnished on or about August 23, 1999 in
connection with the solicitation of proxies by the Board of Directors of
National Auto Credit, Inc., a Delaware corporation (the "Company"), for use at
the 1999 annual meeting of stockholders of the Company (the "Annual Meeting") to
be held on September 15, 1999 at 2:00 p.m., New York City time, at the offices
of Willkie Farr & Gallagher, 787 Seventh Avenue, 38th Floor, New York, New York
10019, or at any adjournment or postponement thereof. A Notice of Annual Meeting
of Stockholders and a proxy card (the "Proxy") accompany this Proxy Statement.
At the Annual Meeting, action will be taken: (1) to elect two directors
to serve for terms of three years; (2) to ratify the selection of Grant Thornton
LLP as the independent auditors of the Company for the fiscal year ending
January 31, 2000; and (3) to transact such other business that may properly come
before the Annual Meeting. The Board of Directors does not know of any other
matter that is to come before the Annual Meeting. If any other matters are
properly presented for consideration, however, the persons authorized by the
enclosed Proxy will have discretion to vote on such matters in accordance with
their judgment.
Proxy solicitations will be made primarily by mail, but solicitations
may also be made by telephone, facsimile or by personal calls conducted by
officers, directors and employees of the Company, without additional
compensation. The Company will bear the entire cost of solicitation, including
the preparation, assembly, printing and mailing of the Proxy Statement, the
Proxy and any additional soliciting materials furnished to stockholders. Copies
of the solicitation materials will be furnished to brokerage houses, fiduciaries
and custodians holding shares in their names that are beneficially owned by
others so that they may forward this solicitation material to such beneficial
owners. The Company may reimburse such persons for their costs of forwarding
solicitation material to such beneficial owners.
The principal executive offices of the Company is 30000 Aurora Road,
Solon, Ohio 44139.
The Company's annual report containing audited financial statements for
the fiscal years ended January 31, 1999, January 31, 1998 and January 31, 1997
is being mailed to all stockholders along with this Proxy Statement. It is not
to be regarded as proxy-solicitation material.
The close of business on August 2, 1999 (the "Record Date") has been
fixed as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. The Company has one class of
securities entitled to be voted at the Annual Meeting which consists of Common
Stock of the Company, par value $.05 per share, (the "Common Stock"). On the
Record Date, the Company had outstanding 28,643,477 shares of Common Stock. Each
<PAGE> 6
share of Common Stock outstanding on the Record Date is entitled to one vote at
the Annual Meeting. The holders of shares of Common Stock have no cumulative
voting rights in the election of directors.
If the enclosed Proxy is properly executed and received in time to be
voted at the Annual Meeting, the shares represented thereby will be voted in
accordance with the instructions marked in the Proxy. If no instructions are
given, the persons named in the Proxy intend to vote for the nominees for
election as directors of the Company set forth herein, for the ratification of
the selection of Grant Thornton LLP as the independent auditors of the Company
for the fiscal year ending January 31, 2000 and in accordance with their
judgment upon any other matter that may properly come before the Annual Meeting.
Any stockholder giving a Proxy has the right to attend the Annual Meeting to
vote his or her shares in person (thereby revoking any prior Proxy) and also the
right to revoke the Proxy at any time by written notice received by the Company
prior to the time it is voted.
The shares of stock represented at the Annual Meeting, either in
person or by proxy, and entitled to vote thereat, shall constitute a quorum
for the purpose of the Annual Meeting. For purposes of determining
the presence of a quorum for transacting business at the Annual Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted.
Proposal 1 requires for approval the affirmative vote of a plurality of
the votes cast at the Annual Meeting in person or by proxy. A nominee receives a
"plurality of the votes cast" if he receives more votes than any other nominee
for the same director's seat. Proposal 2 requires for approval the vote of a
majority of the shares having voting power present in person or represented by
proxy. Because abstentions and broker non-votes are treated as shares present
but not voted, any abstentions and broker non-votes would have no effect on
Proposal 1 and would have the same effect as a vote AGAINST Proposal 2.
-2-
<PAGE> 7
PROPOSAL 1 - ELECTION OF DIRECTORS
The first proposal to be submitted at the Annual Meeting will be the
election of two (2) directors of the Company, each to hold office for a term of
three years and until his successor is elected and qualified.
The Board of Directors of the Company consists of six members.
Directors hold office for a term of three years and are divided into three
classes so that approximately one-third of the Board of Directors shall stand
for election at each annual meeting of stockholders. At the Annual Meeting, the
shares represented by valid Proxies will be voted, unless otherwise specified,
for the election of Mr. John A. Gleason and Mr. William S. Marshall, each to
serve a term of three years and until his successor is qualified and elected.
Each nominee has indicated his intention to continue to serve if
elected and has consented to being named in this Proxy Statement. If, by reason
of death or other unexpected circumstance, a nominee should not be available for
election, the proxies will be voted for the election of such substitute nominee
as the Board of Directors may propose, unless the Board of Directors reduces the
number of directors.
Messrs. Hunter Brown, Noah T. Herndon and Per E. Hoel resigned as
Directors of the Company on March 9, 1998. Each of them was a member of the
Special Committee which was formed to investigate the matters that arose from
the resignation of Deloitte & Touche LLP as the Company's independent auditors
on January 20, 1998. On March 8, 1998, the Board rejected certain
recommendations included in the report issued by the Special Committee, and
following such decision, Messrs. Brown, Herndon and Hoel resigned, alleging they
could no longer function effectively as Directors.
Set forth below is certain information relating to Messrs. Gleason and
Marshall, the nominees for election as directors, and the directors of the
Company whose terms of office will continue after the meeting:
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
Director Term to
Name of Director Age Principal Occupation and Other Information Since Expire
- ---------------- ----- ------------------------------------------------------- --------- --------
<S> <C> <C> <C> <C>
John A. Gleason 51 President and Owner of Automax, Inc., an independent 1998 2002
used car dealership since 1987. From 1995 to 1998,
Mr. Gleason served on National Auto Credit's Dealer
Advisory Board and served as its Chairman from 1996
to 1998. Mr. Gleason accepted the position of
Director of the Company effective February 20, 1998.
</TABLE>
-3-
<PAGE> 8
<TABLE>
<CAPTION>
Director Term to
Name of Director Age Principal Occupation and Other Information Since Expire
- ---------------- ----- ------------------------------------------------------- --------- --------
<S> <C> <C> <C> <C>
William S. Marshall 82 Attorney engaged in private practice since 1998 2002
April 1985. For more than four years prior thereto,
Mr. Marshall was a partner/ stockholder of the Miami,
Florida office of the law firm Baskin & Steingut,
P.A. Mr. Marshall accepted the position of Director
of the Company effective March 9, 1998 and formerly
served as Director of the Company from 1983 to 1993.
</TABLE>
DIRECTORS WHOSE TERMS WILL CONTINUE AFTER THE ANNUAL MEETING
<TABLE>
<CAPTION>
Director Term to
Name of Director Age Principal Occupation and Other Information Since Expire
- ---------------- ----- ------------------------------------------------------- --------- --------
<S> <C> <C> <C> <C>
Richard M. Cohen 48 Interim Chief Financial Officer of the Company since 1999 2001
July 1999. Interim President of the Company from
January 1999 to May 1999. President of Richard M.
Cohen Consultants, Inc. since 1996. Mr. Cohen is
director of the following companies: Symposium
Telecom, Inc., Directrix Inc., Carnegie International
Inc., and Deyco Acquisition Corporation. From 1992 to
1996 he served as President of General Media, Inc., a
public diversified media and entertainment
conglomerate. Mr. Cohen accepted the position of
Director of the Company effective January 15, 1999.
</TABLE>
-4-
<PAGE> 9
<TABLE>
<CAPTION>
Director Term to
Name of Director Age Principal Occupation and Other Information Since Expire
- ---------------- ----- ------------------------------------------------------- --------- --------
<S> <C> <C> <C> <C>
James J. McNamara 50 Chairman of the Board of the Company since April 1998 2000
1998. Chairman of the Board and Chief Executive
Officer of Princeton Media Group, Inc. from 1994 to
1998. President and Chief Executive Officer of
Celebrity Entertainment, Inc. since 1992 (A
subsidiary of Princeton Media Group, Inc. and
Celebrity Entertainment, Inc. effected an assignment
of their respective assets for the benefit of
creditors in 1998). Mr. McNamara accepted the
position of Director of the Company effective
February 20, 1998.
Allen D. Rice 43 President of the Company since May 1999. Previously 1999 2000
Mr. Rice was Vice President of Marketing for GE
Capital's Customized Auto Credit Services since 1997.
Prior to that he was Vice President and Chief
Marketing Officer of First Merchants Acceptance
Corporation from 1995 to 1997. Before joining First
Merchants, he founded Aegis International, a
management consulting firm, in 1990. Mr. Rice
accepted the position of Director of the Company
effective August 2, 1999.
Henry Y. L. Toh 42 Officer and Director of I-Link Incorporated since 1998 2001
1992, Four M. International, Inc. since 1992 and Four
Vines International since 1996. Mr. Toh accepted the
position of Director of the Company effective
December 22, 1998.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Messrs. Gleason, Marshall and McNamara are members of the Board of
Directors' Special Committee. The Special Committee exercises all the powers of
the Board of Directors in the management of the business and affairs of the
Company, including, but not limited to, (i) continuing the investigation
concerning alleged impropriety with respect to the Company's financial
statements which was commenced following Deloitte & Touche LLP's resignation as
independent auditors of the Company in January 1998, and (ii) reviewing the
Company's business, operations and financial procedures, controls and
statements.
-5-
<PAGE> 10
Forty-one (41) meetings of the Board of Directors were held during
fiscal 1999. Commencing in March 1998, the Special Committee consisted of the
same members as the Board of Directors and therefore met concurrently with the
Board of Directors. The Special Committee met forty (40) times during fiscal
1999.
Messrs. Marshall, Toh and McNamara are members of the Board of
Directors' Audit Committee, which reviews the services provided by the
independent auditors retained by the Company, monitors the adequacy of the
Company's internal accounting controls and reviews the annual financial
statements of the Company. The Audit Committee met twenty-seven (27) times
during fiscal 1999.
Messrs. Gleason, Marshall and McNamara are members of the Board of
Directors' Compensation Committee, which reviews the cash and non-cash
compensation received by officers and key employees. The Compensation Committee
met two (2) times during fiscal 1999.
The Board of Directors has no standing Nominating Committee or other
committee which serves a similar function.
Each incumbent director and each member of the above Committees
attended 75% or more of the meetings held by the Board of Directors and such
Committees, respectively.
SECURITY OWNERSHIP OF MANAGEMENT
The following information is set forth with respect to shares of the
Company's Common Stock beneficially owned, as of the Record Date by all
directors, the nominees for election as directors of the Company, the persons
who served as Chief Executive Officer of the Company during fiscal 1999, the
four other most highly compensated executive officers at January 3l, 1999 (the
"Named Executive Officers") and by all executive officers and directors of the
Company as a group:
<TABLE>
<CAPTION>
Shares of Common Percent of
Stock Beneficially Class
Owned(2) Outstanding
---------------------- ------------
Directors
---------
<S> <C> <C>
Richard M. Cohen 200,000 *
John A. Gleason 175,000 *
James J. McNamara 175,000 *
William S. Marshall 185,000(1) *
Allen D. Rice 27,500 *
Henry Y. L. Toh 175,000 *
</TABLE>
-6-
<PAGE> 11
<TABLE>
<CAPTION>
Shares of Common Percent of
Stock Beneficially Class
Owned(2) Outstanding
---------------------- ------------
<S> <C> <C>
Executive Officers
------------------
Davida S. Howard 52,996 *
Raymond A. Varcho 11,523 *
John Borys 29,128 *
Steven Jaeger 29,528 *
The eleven Executive Officers and
Directors as a group 1,058,628 3.70%
*Less than 1.0%
</TABLE>
- ----------------
(1) Includes 7,000 shares held by Mr. Marshall's wife.
(2) Includes shares which may be acquired within 60 days pursuant to the
Company's 1983 Stock Option Plan and 1993 Equity Incentive Plan as follows:
Mr. Cohen 200,000
Mr. Gleason 175,000
Mr. McNamara 175,000
Mr. Marshall 175,000
Mr. Rice 25,000
Mr. Toh 175,000
Ms. Howard 37,600
Mr. Varcho 5,000
Mr. Borys 20,000
Mr. Jaeger 20,000
The eleven Executive Officers and
Directors as a group 1,012,750
COMPENSATION OF DIRECTORS
Each member of the Board who is not an employee of the Company is paid
$75,000 per year, $25,000 per year for participation on each of the Company's
Audit or Special Committees, and $15,000 per year for participation on any other
Company committee. No individual monetary compensation will exceed
$115,000 per year regardless of the number of committees on which such
individual participates. Each member of the Board who is not an employee of the
Company has received options to purchase 100,000 shares of Common Stock
exercisable and fully vested with a per share exercise price equal to $1.03,
which was the fair market value of the Common Stock at the close of business on
May 6, 1999. In addition, Messrs. Cohen, Rice, McNamara and Marshall have
access to automobiles paid for by the Company.
During fiscal 1999, each member of the Board who is not an employee of
the Company was paid $3,000 and expenses for attendance at each meeting of the
Board or Committee and $250 per hour for time committed outside of formal
meetings and special assignments. In addition, Messrs. Gleason, McNamara and
Marshall were granted 75,000 options exercisable and fully vested with a per
share exercise price equal to $1.66, which was the fair market value of the
Common Stock at the close of business on May 7, 1998. Mr. Toh was also granted
75,000 options exercisable and fully vested with a per share exercise price
equal to $.92, the fair market value
-7-
<PAGE> 12
of the Common Stock at the close of business on December 22, 1998. Amounts paid
to the directors for fiscal 1999 were the following: Mr. Gleason $339,600; Mr.
McNamara $437,650; Mr. Marshall $330,749 and Mr. Toh $36,375. The Board also
awarded to Mr. McNamara, Chairman of the Board, an additional cash compensation
in the amount of $300,000 for services provided above and beyond the duties
typically performed by a Chairman.
EXECUTIVE OFFICERS
The following sets forth the names of the executive officers of the
Company (other than Messrs. Rice and Cohen who are described above), their
respective positions with the Company and business experience and background.
<TABLE>
<CAPTION>
Name of Officer Age Position with the Company; Principal Occupation for Last Five Years
- --------------------------- ---- --------------------------------------------------------------------
<S> <C> <C>
John Borys 48 Vice President, Credit and Collections since August 1996. Mr. Borys was
previously Vice President, KeyCorp from 1994 to 1996. Prior to that he
was Assistant Vice President of KeyCorp from 1993 to 1994.
Lynn Cesar 39 Vice President, Loan Originations since November 1998. Previously Ms.
Cesar was Vice President, Huntington State Bank from 1997 to 1998.
Prior to that she was Vice President, Automotive Financial Services
from 1995 to 1997. Before joining Automotive Financial Services, she
was Director of Collections, Sterling, Inc. from 1992 to 1995.
Steven Jaeger 56 Vice President, Information Services since June 1998. Previously Mr.
Jaeger was Director of Information Services of the Company since 1995.
Prior to 1995, he was a senior level executive for divisions of
NationsBank and Englehard Corporation.
Thomas G. Osco 38 Vice President, Sales and Marketing since October 1997. Previously Mr.
Osco was Director of Dealer Development, Area Manager and Program Car
Manager with the Company. He has been employed by the Company since
1987.
Raymond A. Varcho 43 Vice President, General Counsel and Secretary since October 1997.
Previously Mr. Varcho was Assistant General Counsel of Rockwell
International Corporation from 1993 to 1997.
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation earned for
services rendered by the Company's Chief Executive Officer, the Named Executive
Officers and any other individual that would have been among the four most
highly compensated executives but
-8-
<PAGE> 13
for the fact that the individual was not serving as an executive officer at the
end of the last completed fiscal year for the fiscal years ended January 31,
1999, 1998 and 1997.
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Name and Principal Position At Long-Term
January 31, 1999 Annual Compensation Compensation Awards
- ------------------------------------------------------------------------------------------------------
Securities
Other Annual Restricted Underlying All
Compensation Stock Options Other
Fiscal Salary Bonus (1),(10) Awards(2) SARS Compensation(3)
Year ($) ($) ($) ($) (#) ($)
------ ------- ------ ------------ --------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard M. Cohen(4) 1999 33,333 - - - 100,000 -
Interim President 1998 - - - - - -
(Commencing January 15, 1999) 1997 - - - - - -
Davida S. Howard 1999 165,677 46,138 15,334 5,497 20,000 4,115
Vice President, 1998 129,231 12,400 12,564 14,850 - 3,054
Finance and Controller 1997 113,047 1,000 10,930 42,563 - 2,697
Raymond A. Varcho(5) 1999 142,408 5,641 11,455 5,963 5,000 1,092
Vice President, 1998 26,154 1,000 2,912 - - 123
General Counsel and Secretary 1997 - - - - - -
John Borys(6) 1999 128,946 8,214 13,723 5,963 20,000 3,319
Vice President, 1998 100,885 11,100 12,283 12,900 - 462
Credit and Collections 1997 31,154 1,000 4,433 7,375 - 154
Steven Jaeger 1999 115,439 6,303 7,447 5,300 20,000 3,318
Vice President, 1998 104,644 8,400 5,236 11,100 - 2,585
Information Services 1997 100,000 1,000 4,580 - - 626
Thomas W. Cross(7) 1999 730,835 - - - - -
Interim Chief Executive Officer 1998 - - - - - -
(June 1, 1998 to January 14, 1999) 1997 - - - - - -
Sam J. Frankino(8) 1999 110,000 - 53,174 - - 769
Former Chairman of the Board 1998 465,385 1,000 79,143 88,000 - 246
1997 397,116 116,000 71,886 51,250 - 462
Edward T. Anderson(9) 1999 141,061 5,797 15,990 15,531 - 35,665
Former Acting President 1998 114,615 13,600 14,158 15,400 - 2,761
1997 103,269 1,000 12,960 42,563 - 2,518
</TABLE>
(1) The amounts included in this column are the imputed value for use of
Company automobiles and related tax reimbursements. Executive Officers
who were Directors do not receive any additional compensation for
serving on the Board of Directors.
(2) These awards are fully vested but may not be sold or transferred until
such time as the recipient directly owns and maintains Company stock
equal to three times the individual's annual salary, including bonus,
or the individual terminates employment with the Company. Restricted
stock holdings in excess of the required ownership amounts may be
disposed of provided that minimum ownership requirements are maintained
during the term of the individual's employment. The restricted shares
awarded are eligible for any dividends the Company may declare on its
Common Stock. The total restricted stock holdings for the officers at
January 31, 1999 were as follows:
<TABLE>
<CAPTION>
Number of Shares Fair Market Value ($)
---------------- ---------------------
<S> <C> <C>
Mr. Cohen - -
Ms. Howard 16,050 23,915
Mr. Varcho 9,700 14,453
Mr. Borys 12,000 17,880
Mr. Jaeger 12,400 18,476
</TABLE>
3 In fiscal year 1999 the Company contributed to Ms. Howard's, Messrs.
Varcho's, Borys', Jaeger's, and Anderson's 401(k) Savings and
Retirement Plan and Trust Accounts in the following amounts: Ms. Howard
- $3,062; Mr. Varcho - $231; Mr. Borys - $2,621; Mr. Jaeger - $2,307;
and Mr. Anderson - $3,123. In addition, the Company paid insurance
premiums for term life/accidental death and disability
-9-
<PAGE> 14
coverage for the respective individuals in the following amounts: Ms.
Howard - $688; Messrs. Varcho, Borys and Jaeger - $688; Mr. Frankino
$256 and Mr. Anderson - $512. The Company also paid certain individuals
health insurance premiums and vision care for the following amounts:
Ms. Howard - $365; Mr. Varcho - $173; Mr. Borys - $10; Mr. Jaeger -
$323; Mr. Frankino - $513 and Mr. Anderson - $530. In addition, Mr.
Anderson was paid $31,500 during fiscal year 1999 as part of his
severance agreement (See Note 9).
4 Mr. Cohen, President of Richard M. Cohen Consultants, Inc., entered
into a six-month agreement with the Company as a consultant effective
November 30, 1998. The Company appointed him Interim President and
Director, effective January 1999. The Company paid him $200,000 for his
services.
5 Mr. Varcho's amounts reflect compensation commencing with his date of
employment, October 15, 1997.
6 Mr. Borys' amounts reflect compensation commencing with his date of
employment, August 19, 1996.
7 Mr. Cross is a Principal with Jay Alix & Associates, a corporate
turnaround specialist firm. Mr. Cross provided consulting to the
Company and was named Interim Chief Executive Officer on June 1, 1998
and left this position January 14, 1999. Jay Alix & Associates were
paid $730,835 for services rendered by him.
8 Mr. Frankino temporarily vacated his position as Chairman of the Board
January 19, 1998 to March 8, 1998. Mr. Frankino resumed his position on
March 9, 1998 until March 31, 1998 when he retired. Mr. Frankino's
fiscal year 1999 salary reflects actual payments; on an annualized
basis his base salary would have been $550,000.
9 Mr. Anderson, was Executive Vice President until March 9, 1998 when he
was named Acting President until his resignation from the Company on
November 23, 1998. He entered into a twelve-month severance agreement
with the Company effective November 23, 1998 to provide consulting
services and agreeing with certain non-competition and non-solicitation
terms in exchange for $189,000 compensation and continued
participation/coverage in all Company provided benefit plans (See Note
3).
10 Mr. Frankino's amount included in this column also include payments
related to personal expenses and the imputed value for the use of
Company automobiles by members of his family.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term(2)
- ---------------------- ----------------------------------------------------------------------------- ------------------------
Number of Securities Percent of Total
Underlying Options/SARs Granted Exercise or
Options/SARs Granted to Employees in Base Price Expiration
Name (#) Fiscal Year ($/sh)(1) Date(1) 5% ($) 10% ($)
- --------------------- ----------------------- --------------------- ---------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Cohen(3) 100,000 46.95% 1.1484 11/30/08 72,222 183,025
Davida S. Howard 20,000 9.39% 1.1484 12/1/08 14,444 36,605
Raymond A. Varcho 5,000 2.35% 1.1484 12/1/08 3,611 9,151
John Borys 20,000 9.39% 1.1484 12/1/08 14,444 36,605
Steven Jaeger 20,000 9.39% 1.1484 12/1/08 14,444 36,605
Thomas W. Cross -- -- -- -- -- --
Sam J. Frankino -- -- -- -- -- --
Edward T. Anderson -- -- -- -- -- --
</TABLE>
(1) Options were granted at the market price of the stock at the date of
grant. Mr. Cohen's options vested 50% on the grant date of November 30,
1998 and 50% on May 31, 1999. The remaining options were granted on
December 1, 1998 and vested 50% on that date and the remaining 50%
vested on June 30, 1999.
(2) The dollar amounts under these columns are the result of calculations
at the 5% and 10% rates required by the SEC and, therefore are not
intended to forecast future appreciation of the stock price.
(3) Does not reflect 100,000 shares which may be acquired by exercise of
options that were issued to each member of the Board of Directors as
described under "Compensation of Directors."
-10-
<PAGE> 15
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal Year In-the-Money Options/SARS at
End (#)(1) Fiscal Year End($)(2)
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Cohen(3) 0 0 50,000 50,000 17,080 17,080
Davida S. Howard 0 0 27,600 18,250 3,416 3,416
Raymond A. Varcho 0 0 2,500 2,500 854 854
John Borys 0 0 10,000 10,000 3,416 3,416
Steven Jaeger 0 0 10,000 15,500 3,416 3,416
Thomas W. Cross 0 0 -- -- -- --
Sam J. Frankino 0 0 -- -- -- --
Edward T. Anderson 0 0 3,190 -- -- --
</TABLE>
(1) Includes options with exercise prices ranging from $1.1484 to $10.909.
(2) Values are calculated using the January 31, 1999, Common Stock closing
price of $1.49 per share as reported on the OTC Bulletin Board.
(3) Does not reflect 100,000 shares which may be acquired by exercise of
options that were issued to each member of the Board of Directors as
described under "Compensation of Directors."
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
Effective May 12, 1999, the Company entered into an employment
agreement with Mr. Allen D. Rice (the "Rice Employment Agreement"). The Rice
Employment Agreement provides that Mr. Rice will become the President of the
Company. The Rice Employment Agreement provides that the Company will
nominate Mr. Rice to the Board of Directors on or before September 30, 1999
and that the Company will use its best efforts to see that Mr. Rice is
appointed to the Board of Directors, subject to the Board of Directors'
approval. The Rice Employment Agreement provides for an employment term of three
years, after which the agreement will be automatically renewed for one year
terms unless termination notice is given by either Mr. Rice or the Company six
months prior to the end of the initial three year term or any subsequent one
year term. During the term, Mr. Rice will receive a base salary of $300,000 per
year subject to price index. The Rice Employment Agreement provides for a
maximum annual bonus opportunity equal to 66.6% of Mr. Rice's base salary with a
guaranteed bonus during the first year equal to $100,000. The Rice Employment
Agreement also provides for an award of 30,000 shares of restricted stock,
vesting proportionately on a monthly basis over the two years following the date
of grant, and an initial award of options with respect to 300,000 shares of
Common Stock with an exercise price equal to the fair market value of the Common
Stock on the date of grant vesting proportionately on a monthly basis over the
two years following the date of grant. Additionally, the Rice Employment
Agreement provides for annual awards of options during the term with respect to
300,000 shares of Common Stock each year having similar terms and conditions as
the initial option award. On the last day of each fiscal year during the term of
the Rice Employment Agreement, provided Mr. Rice has met or exceeded the
performance objectives set by the Board of Directors, Mr. Rice may purchase an
additional option with respect to 100,000 shares of Common Stock. The purchase
price for this additional option shall equal the option's value based on a
Black-Scholes valuation methodology. In the event that Mr. Rice is terminated by
the Company without Cause (as defined in the Rice Employment Agreement) or Mr.
Rice resigns for Good Reason (as defined in the Rice Employment Agreement), the
Company is obligated to pay
-11-
<PAGE> 16
Mr. Rice a lump sum equal to his base salary for remainder of employment term
and a bonus for the then current bonus year prorated for the period of time for
which Mr. Rice was employed during the year. In addition, all other benefits
under the Rice Employment Agreement are to be continued for the remainder of the
term of the agreement.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee consists of Messrs. Gleason, McNamara and
Marshall since March 1998. Prior to that Messrs. Noah T. Herndon and Per E. Hoel
were members of the Compensation Committees and members of the Board of
Directors for six and fifteen years, respectively.
BOARD OF DIRECTORS' COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee of the Board of
Directors and the performance graph that appears after such report shall not be
deemed to be soliciting material or to be filed with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or incorporated
by reference in any document so filed.
The Compensation Committee (the "Committee") is comprised of three
non-employee directors. The Committee regularly reviews the executive
compensation policies and practices of the Company and establishes the salaries
of executive officers. The Committee also administers the Company's 1993 Equity
Incentive Plan. Messrs. Gleason, Marshall and McNamara were Committee members
during fiscal 1999.
The Company's primary objective is to maximize stockholder value. To
aid in accomplishing this goal, the Committee is guided by two principles in
determining executive compensation policies: first, to attract, develop, reward
and retain highly talented individuals; and second, to motivate executive
officers to perform to the best of their abilities and to achieve both
short-term and long-term Company objectives that will contribute to the overall
goal of enhancing stockholder value.
The Company's executive compensation program consists of two main
elements:
(1) Annual compensation which is comprised of base salary and bonus;
and
(2) Long-term incentives that provide a financial opportunity through
grants of restricted stock and other forms of stock-based awards. The
compensation that may be realized by executives through these incentives is tied
directly to the future value of the Company's Common Stock.
The Committee believes that the Company's executive compensation
program reflects the fundamental principles previously described and provides
strong incentives to executives to maximize Company performance.
-12-
<PAGE> 17
In establishing total compensation, the Committee considers a variety
of measures of historical and projected Company performance. This review
includes such measures as net income, return on equity, sales and total market
value. This information forms the basis for the Committee's assessment of the
overall performance of its executives and is the cornerstone for establishing
their compensation. The Committee also compares the total compensation package
(and, to the extent possible, the compensation of individual executive officers)
with companies of comparable size and stature. The compensation comparison
groups are not necessarily the same peer group companies used in the stock
performance graph included in this proxy statement. In addition, consideration
is given to the specific functional responsibilities of each executive's
position.
During fiscal 1999, the Committee also awarded restricted stock to
executive officers in amounts ranging from 12,200 to 15,200 shares, as well as
awarding stock options to select executive officers. These awards were based on
the individual effort of each executive based upon the factors listed above.
On June 1, 1998, the Company engaged the services of corporate
turnaround specialist Jay Alix & Associates. Pursuant to this engagement, Thomas
W. Cross, a Principal with Jay Alix & Associates ("Jay Alix"), was appointed
Interim Chief Executive Officer of the Company. Mr. Cross served as Interim
Chief Executive Officer through January 14, 1999. Pursuant to the agreement
between Jay Alix and the Company, Jay Alix was paid a total of $730,835 for
services rendered by Mr. Cross during his term as Interim Chief Executive
Officer. Mr. Cross' compensation was paid based on a fee structure agreed upon
with Jay Alix reflecting the extraordinary and difficult task given to Mr. Cross
and his associates of restructuring and rebuilding the Company.
The Committee is continuing to review the qualifying compensation
regulations issued by the Internal Revenue Service which provide that no
deduction is allowed for applicable employee compensation paid by a publicly
held corporation to a covered employee to the extent that compensation paid to
the employee exceeds $1 million for the applicable tax year, unless certain
conditions are met. Currently, compensation to any employee is not expected to
exceed $1 million and thus should not be affected by the qualifying compensation
regulations.
Respectfully submitted,
John A. Gleason
William S. Marshall
James J. McNamara
-13-
<PAGE> 18
STOCKHOLDER RETURN
The following graph compares the Company's cumulative stockholder
return with that of the S&P SmallCap 600 Index and The Dow Jones Financial Index
(Peer Group Index). The periods presented include the five fiscal years
commencing February 1, 1994 and ending January 31, 1999. The graph assumes an
investment of $100 on February 1, 1994, including reinvestment of all dividends,
and indicates the appreciation or depreciation of each investment over a
five-year period. The historical performance depicted on the graph is not
necessarily indicative of future performance. Figures relating to the Company
have been adjusted to reflect a 10% stock dividend issued April 30, 1996.
Comparison of 5 Year Cumulative Total Return
Among National Auto Credit, Inc., The S&P SmallCap 600 Index
and The Dow Jones Financial Index(1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Cumulative Total Returns ($)
- ---------------------------------------------------------------------------------------------------------------------
1/31/94 1/31/95 1/31/96 1/31/97 1/31/98 1/31/99
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Auto Credit, Inc. 100 83 94 92 9 13
- ---------------------------------------------------------------------------------------------------------------------
S&P SmallCap 600 100 92 121 149 181 187
- ---------------------------------------------------------------------------------------------------------------------
Dow Jones Financial 100 97 149 208 281 325
(Peer Group Index)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In the printed version of the document, a line graph appears which
depicts the above plot points.
-14-
<PAGE> 19
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES AND EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Common Stock to file with
the SEC initial reports of ownership and reports of changes in ownership of the
Company's Common Stock. Based solely upon a review of Forms 3, 4 and 5 and
amendments thereto furnished to the Company with respect to the fiscal year
ended January 31, 1999, Ms. Cesar and Messrs. Cohen, Cross, Gleason, McNamara,
and Toh each failed to timely file an initial report of beneficial ownership
required under Section 16(a) of the Exchange Act.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to each
person or group known to the Company to be beneficial owners, as of the Record
Date, of more than 5% of the Company's outstanding shares of Common Stock:
<TABLE>
<CAPTION>
Name and Address of Shares of Common Stock Percent of Class
Beneficial Owner Beneficially Owned Outstanding
---------------- ------------------ ---------------
<S> <C> <C>
Sam J. Frankino 15,743,012(1) 54.96%
7108 Eagle Terrace
West Palm Beach, FL 33412
Ernest C. Garcia II 2,849,630(2) 9.95%
2525 East Camelback Road
Suite 1150
Phoenix, Arizona 85016
</TABLE>
- ----------------
(1) Mr. Frankino has both voting and investment power with respect to the
shares listed. Of the shares shown above, 726,452 shares are held by
the Samuel J. and Connie M. Frankino Charitable Foundation, and
l,000,000 shares are held by Corrine L. Dodero Trust for the Arts and
Sciences, both of which are qualified charitable foundations, as to
which Mr. and Mrs. Frankino have voting and investment power. Mr.
Frankino disclaims any beneficial interest in such 1,726,452 shares.
(2) Of the shares shown above 134,000 shares are owned by Verde
Investments, Inc. Mr. Garcia, as the sole owner of all the common stock
of Verde Investments, Inc., has beneficial ownership of these shares.
On May 10, 1999, Mr. Garcia entered into an option agreement with the
Company for all 2,849,630 of his shares of stock and issued a proxy to
vote all such shares to Mr. Henry Y. L. Toh, a director of the Company.
See "Certain Relationships and Related Transactions" below.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 10, 1999, the Company and Mr. Ernest C. Garcia II entered into
an agreement (the "Option Agreement") pursuant to which the Company acquired an
option to purchase 2,849,630 shares of the Company's Common Stock beneficially
owned by Mr. Garcia. The option was for an initial term of 45 days and is
exercisable at the price of $1.50 per share. In consideration for the option,
the Company paid $1 million, all of which will be credited toward the aggregate
exercise price payable by the Company upon exercise of the option. On June 24,
1999, the option was extended for an additional 45 days (the "First Extension").
In consideration
-15-
<PAGE> 20
for the First Extension, the Company paid $500,000, $250,000 of which will be
credited toward the aggregate exercise price payable by the Company upon the
exercise of the option. On August 8, 1999, the option was extended for an
additional 120 days (the "Second Extension"). In consideration for the Second
Extension, the Company paid $1,000,000, $750,000 of which will be credited
toward the aggregate exercise price payable by the Company upon the exercise of
the option. In connection with the Option Agreement, Mr. Garcia issued a proxy
to vote all his controlled shares to Mr. Henry Y. L. Toh, a director of the
Company.
CERTAIN LEGAL PROCEEDINGS
The Company and certain of its former officers and directors, including
Sam J. Frankino, the former Chairman of the Company's Board of Directors and its
majority stockholder, have been named as defendants in eleven purported class
action lawsuits which were filed in the United States District Court for the
Northern District of Ohio. The actions allege fraud and other violations of the
federal securities laws. The actions were consolidated on October 16, 1998, and
discovery is presently stayed pending the court's rulings on various outstanding
motions. The consolidated action seeks money damages as the result of various
alleged frauds and violations of the Exchange Act, including misrepresentations
about the adequacy of the Company's allowance for credit losses and its loan
underwriting practices. Although the Company and Mr. Frankino are cooperating in
the defense of these actions, Mr. Frankino could be deemed to have a material
interest adverse to the Company in the outcome of the litigation. The Company
has accrued $3,000,000 to defend against this action. Although the Company
intends to vigorously defend itself, the ultimate outcome of these actions,
including the range of loss, if any, cannot presently be predicted, and the
Company has not recorded any provision for any damages that may result from
these actions. An unfavorable resolution of these actions could have a material
adverse effect on the Company's financial position, results of operations and
liquidity.
The SEC, the United States Attorney for the Northern District of Ohio
and the Federal Bureau of Investigation are investigating the issues raised as
the result of the resignation of Deloitte & Touche LLP, the Company's former
independent auditors. The Company is cooperating fully with the investigations.
The ultimate outcome of these investigations on the Company cannot presently be
predicted. An unfavorable resolution of any of these investigations could have a
material adverse effect on the Company's financial position, results of
operations and liquidity.
On June 7, 1999, Sam J. Frankino, the former Chairman of the Company's
Board of Directors and its majority stockholder, instituted two separate civil
actions against the Company in the Delaware Court of Chancery. The first of
these actions sought to compel the Company to hold an annual meeting of
stockholders for the election of directors. The second of these actions sought
to inspect the Company's stocklist materials and other of its books and records
in connection with such annual meeting. On June 21, 1999, the Company resolved
both of these actions by stipulation, agreeing to hold an annual meeting of
stockholders on September 15, 1999, and agreeing to make available to Mr.
Frankino the stocklist and other materials he had requested.
-16-
<PAGE> 21
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 1 -
THE ELECTION OF MR. JOHN A. GLEASON AND MR. WILLIAM S. MARSHALL AS DIRECTORS OF
THE COMPANY.
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT AUDITORS
The second proposal to be submitted to the stockholders at the Annual
Meeting will be the ratification or rejection of the selection of Grant Thornton
LLP as the Company's independent auditors for the fiscal year ending January 31,
2000. Grant Thornton LLP has been the Company's independent auditors since
February 19, 1998 and has audited the Company's financial statements for the
fiscal year 1999. Representatives of Grant Thornton LLP are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire and are expected to be available to respond to appropriate
questions.
On January 16, 1998, Deloitte & Touche LLP informed the Board of
Directors of the Company that it had resigned as the Company's independent
auditors. The Company reported the resignation of Deloitte & Touche LLP in a
Current Report on Form 8-K filed January 21, 1998.
The reports of Deloitte & Touche LLP on the Company's financial
statements for each of the two fiscal years preceding Deloitte & Touche LLP's
resignation contained no adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principle. In
connection with its audits for the those two fiscal years and through January
16, 1998, there were no disagreements between the Company and Deloitte & Touche
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Deloitte & Touche LLP would have caused it to make
reference thereto in its report on the financial statements for such fiscal
years.
During the fiscal year ended January 31, 1997 and through January 16,
1998, there were no reportable events as defined in Item 304(a)(l)(v) of
Regulation S-K, except as follows:
(i) On January 12, 1998, representatives of Deloitte & Touche LLP
advised the President and the Chairman of the Board of Directors of the
Company that Deloitte & Touche LLP had been advised by current and
former employees of the Company of potentially improper activities that
may affect the Company's financial accounting records. Deloitte &
Touche LLP recommended that the Board of Directors conduct an
investigation of these allegations and informed the Company that it had
made no investigation of the information.
(ii) On January 16, 1998, Deloitte & Touche LLP advised the Board of
Directors and management of Company that information had come to the
attention of Deloitte & Touche LLP that led Deloitte & Touche LLP to
conclude that Deloitte & Touche LLP could no longer rely on
management's representations and informed the Board of
-17-
<PAGE> 22
Directors and management of the Company that it had made no
investigation of the information.
(iii) Prior to its resignation Deloitte & Touche LLP had communicated
to the Company, in a letter dated March 6, 1997, certain matters
involving the internal control structure of the Company related to its
self-insurance claims liability and loan loss reserves which Deloitte &
Touche LLP considered to be "reportable conditions" under standards
established by the American Institute of Certified Public Accountants.
The Company provided Deloitte & Touche LLP with a copy of the above
disclosures, as contained in the January 21, 1998 Form 8-K, and requested that
Deloitte & Touche LLP furnish the Company with a letter addressed to the SEC
stating whether or not it agreed with such disclosures. Deloitte & Touche LLP
provided the Company with a letter dated January 20, 1998 stating that it did
not disagree with the disclosures, as set forth above, contained in the January
21, 1998 Form 8-K. A copy of that letter was filed as an exhibit to the January
21, 1998 Form 8-K.
On February 19, 1998 the Company engaged Grant Thornton LLP as its new
independent accountants. The Company reported the engagement of Grant Thornton
LLP in a Current Report on Form 8-K dated February 20, 1998. During the two
fiscal years immediately preceding the engagement of Grant Thornton LLP, and
through February 19, 1998, the Company did not consult with Grant Thornton LLP
regarding the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Company's financial statements, and the Company was not provided
with any written report or oral advice by Grant Thornton LLP that Grant Thornton
LLP concluded was an important factor considered by the Company in reaching a
decision as to an accounting, auditing or financial reporting issue.
Additionally, during the two fiscal years, immediately preceding the engagement
of Grant Thornton LLP, and through February 19, 1998, the Company did not
consult with Grant Thornton LLP regarding any matter that was either the subject
of a disagreement (as that term is defined in Item 304(a)(1)(iv) of Regulation
S-K and the related instructions to Item 304 of Regulation S-K) or a reportable
event (as that term is described in Item 304(a)(1)(v) of Regulation S-K).
At the time the Company engaged Grant Thornton LLP, it authorized Grant
Thornton LLP to communicate with Deloitte & Touche LLP, and authorized Deloitte
& Touche LLP to respond fully, without limitation, to the inquiries of Grant
Thornton LLP.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL
OF PROPOSAL 2 - THE RATIFICATION OF THE SELECTION OF GRANT THORNTON LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JANUARY 31, 2000.
OTHER MATTERS
Management of the Company knows of no other matter which may come
before the Annual Meeting. However, if any additional matters are properly
presented at the Annual
-18-
<PAGE> 23
Meeting, it is intended that the persons named in the enclosed Proxy, or their
substitutes, will vote such proxy in accordance with their judgment on such
matters.
STOCKHOLDER PROPOSALS
Notice is hereby given that for a stockholder proposal to be considered
for inclusion in the Company's proxy materials relating to its year 2000 annual
meeting, the stockholder proposal must be received by the Company no later than
April 25, 2000 or such other date as prescribed by Rule 14a-8(e) under the
Exchange Act. Stockholder proposals intended for presentation at the Company's
year 2000 annual meeting of stockholders should be sent to 30000 Aurora Road,
Solon, Ohio 44139, Attention: Secretary. The stockholder proposal, including any
accompanying supporting statement, may not exceed 500 words. A stockholder
desiring to submit a proposal must be a record or beneficial owner of at least
$2,000 in market value or 1% of the Company's securities entitled to be voted on
the proposal at the meeting and must have held such securities for at least one
year. Further, the stockholder must continue to hold such securities through the
date on which the meeting is held. Documentary support regarding the foregoing
must be provided along with the proposal. There are additional requirements
regarding proposals of stockholders, and a stockholder contemplating submission
of a proposal is referred to Rule 14a-8 promulgated under the Exchange Act. The
timely submission of a proposal does not guarantee its inclusion in the
Company's proxy materials.
For a nomination for election to the Board of Directors at any meeting
of the stockholders of the Company to be properly made by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Company at National Auto Credit, Inc., 30000 Aurora Road, Solon, Ohio 44139
not later than 14 days and not earlier than 50 days prior to the date of the
meeting. Any such notice shall set forth the name, age, business address,
residence address and principal occupation or employment of each nominee
proposed in such notice, and the number of shares of stock of the Company which
are beneficially owned by such nominee.
The Company may exercise discretionary voting authority with respect to
any stockholder proposals for the year 2000 annual meeting not included in the
proxy statement and form of proxy which are not submitted to the Company within
the timeframe prescribed by Rule 14a-4(c)(1) under the Exchange Act. Even if
timely notice is received, the Company may exercise discretionary voting
authority in certain other circumstances. Discretionary voting authority is the
ability to vote proxies that stockholders have executed and returned to the
Company on matters not specifically reflected on the form of proxy.
INFORMATION AVAILABLE TO STOCKHOLDERS
The Company's 1999 Annual Report to Stockholders is being mailed with
this proxy statement to all stockholders entitled to notice of and to vote at
the Annual Meeting. Copies of the 1999 Annual Report and the Company's Annual
Report on Form 10-K as filed with the SEC may be obtained by stockholders,
without charge, from the Company by written request to: National Auto Credit,
Inc., Attn: Raymond A. Varcho, Secretary, 30000 Aurora Road, Solon, Ohio 44139.
The Company's 1999 Form 10-K is also on file with the SEC and can be obtained
directly at the SEC's website: http://www.sec.gov.
-19-
<PAGE> 24
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED IF YOU DO NOT PLAN TO
ATTEND THE ANNUAL MEETING, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING.
IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON
IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
IF YOU OWN YOUR SHARES THROUGH BANK OR BROKERAGE ACCOUNTS, YOU SHOULD
BRING A WRITTEN STATEMENT FROM THE BANK OR BROKER VERIFYING THAT YOU ARE THE
BENEFICIAL OWNER OF YOUR SHARES OR OTHER APPROPRIATE PROOF OF YOUR OWNERSHIP IF
YOU WISH TO ATTEND THE MEETING.
By Order of the Board of Directors
/s/ James J. McNamara
- ----------------------------------
James J. McNamara
Chairman of the Board of Directors
Solon, Ohio
August 23, 1999
-20-
<PAGE> 25
NATIONAL AUTO CREDIT, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 15, 1999, 2:00 P.M.
(NEW YORK CITY TIME)
THE OFFICES OF WILLKIE FARR & GALLAGHER, 787 SEVENTH AVENUE, 38TH FLOOR,
NEW YORK, NEW YORK 10019
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NATIONAL AUTO
CREDIT, INC. IN CONNECTION WITH ITS ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON SEPTEMBER 15, 1999.
The undersigned stockholder of National Auto Credit, Inc. (the
"Company"), revoking all previous proxies, hereby constitutes and appoints Henry
Y. L. Toh as proxy with full power of substitution to vote on behalf of the
undersigned all shares of common stock of the Company which the undersigned is
entitled to vote at the 1999 Annual Meeting of Stockholders of the Company (the
"Annual Meeting") to be held on September 15, 1999, at 2:00 p.m., New York City
time, at the offices of Willkie Farr & Gallagher, 787 Seventh Avenue, 38th
Floor, New York, New York 10019, and at any adjournment and postponements
thereof, upon all matters presented before such Annual Meeting, and does hereby
ratify and confirm all that said proxy or his substitute may lawfully do by
virtue hereof. The undersigned hereby acknowledges receipt of the Notice of the
Annual Meeting and the accompanying Proxy Statement and hereby instructs said
proxy to vote or refrain from voting such shares of common stock as marked on
the reverse side upon the matters listed on the reverse side. Such proxy is
authorized to vote such shares in accordance with his judgment upon such other
business as may properly come before the Annual Meeting.
IF PROPERLY EXECUTED, THIS PROXY WILL BE
VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE
NOMINEES FOR DIRECTOR INDICATED ON THE
REVERSE SIDE AND FOR THE RATIFICATION OF
GRANT THORNTON LLP NATIONAL AUTO CREDIT, INC.
P.O. BOX 11163
NEW YORK, NEW YORK 10203-0163
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE NOMINEES IN
PROPOSAL 1 AND "FOR" PROPOSAL 2.
DO NOT SUBMIT ANY STOCK CERTIFICATES WITH THIS PROXY CARD.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 26
<TABLE>
<S> <C> <C> <C>
1. To elect the two (2) nominees listed below to the Board WITHHOLD
of Directors of NAC for terms of three (3) years. AUTHORITY
FOR all nominees to vote for all
Nominees: John A. Gleason, William S. Marshall listed below nominees listed
[ ] below [ ] *EXCEPTIONS [ ]
</TABLE>
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write the nominee's name in the space provided below.)
*Exceptions ___________________________________________________________________
<TABLE>
<S> <C> <C> <C>
2. To ratify the selection of Grant FOR [ ] AGAINST [ ] ABSTAIN [ ]
Thornton LLP as the independent
auditors of the Company for the fiscal
year ending January 31, 2000.
Mark Here If You Plan To Change of Address and
Attend The Meeting [ ] or Comments Mark Here [ ]
</TABLE>
Please mark, date and sign exactly as your
name appears hereon and return in the
enclosed envelope. If acting as executor,
administrator, trustee, guardian, etc., you
should so indicate when signing. If the
signer is a corporation, please sign the
full corporate name, by duly authorized
officer. If shares are held jointly, each
stockholder named should sign.
Date:
--------------------------------------
Signature
--------------------------------------
Signature
Votes must be indicated [X]
(x) in Black or Blue ink
(Please sign, date and return this proxy in the enclosed postage prepaid
envelope.)
