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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 8, 1999
NATIONAL AUTO CREDIT, INC.
(Exact name of registrant as specified in charter)
DELAWARE 1-11601 34-1816760
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
30000 AURORA ROAD, 44139
SOLON, OHIO (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (440) 349-1000
NOT APPLICABLE
(Former name or former address, if changed from last report)
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ITEM 5. OTHER EVENTS.
National Auto Credit, Inc. (the "Company") has entered into an
agreement with Ernest C. Garcia II (the "Extension Agreement"), dated as of
August 8, 1999, pursuant to which the Company's option to purchase 2,849,630
shares of its Common Stock beneficially owned by Mr. Garcia (the "Option"),
which Mr. Garcia had granted the Company on May 10, 1999, was extended for an
additional 120 days. In consideration for this 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. The proxy granted
by Mr. Garcia to Henry Y.L. Toh, an independent director of the Company, to vote
the shares subject to the Option was also extended for an additional 120 days.
The Option Agreement entered into by the Company and Ernest C. Garcia
II on May 10, 1999 was reported by the Company pursuant to a Current Report on
Form 8-K filed with the Securities and Exchange Commission on May 25,1999.
The Extension Agreement is set forth as Exhibit 10 (m) and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) - (b) None.
(b) Exhibits.
10 (m) Letter Agreement, dated as of August 8, 1999, by and
among the Company, Ernest C. Garcia II (on his own
behalf and , for the purposes of delivery of 134,000
shares of Common Stock, on behalf of Verde
Investments, Inc., as President) and Steven Johnson
(for purposes of Section 4(c), (d) and (g) of the
Option Agreement only) and Gordon, Fournaris &
Mammarella, P.A.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL AUTO CREDIT, INC.
By: /s/ Raymond A. Varcho
-------------------------
Name: Raymond A. Varcho
Title: Vice President, General
Counsel and Secretary
August 18, 1999
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EXHIBIT INDEX
10(m) Letter Agreement, dated as of August 8, 1999, by and among the
Company, Ernest C. Garcia II (on his own behalf and, for the purposes
of delivery of 134,000 shares of Common Stock, on behalf of Verde
Investments, Inc., as President) and Steven Johnson (for purposes of
Section 4(c), (d) and (g) of the Option Agreement only) and Gordon,
Fournaris & Mammarella, P.A.
4
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Exhibit 10(m)
NATIONAL AUTO CREDIT, INC.
30000 AURORA ROAD
SOLON, OHIO 44139
As of August 8, 1999
Ernest C. Garcia II
2525 E. Camelback Road
Suite 1150
Phoenix, Arizona 85011
Dear Mr. Garcia:
Reference is made to (i) the Letter Agreement, dated May 10, 1999
(the "Option Agreement"), by and among National Auto Credit, Inc., a Delaware
corporation (the "Company"), Ernest C. Garcia II and Steven Johnson (for
purposes of Section 4(c), (d) and (g) of the Option Agreement only), as
extended by a Notice of Extension from the Company dated June 24, 1999, (ii)
the Escrow Agreement, dated as of May 10, 1999, between the Company, Ernest C.
Garcia II and Gordon, Fournaris & Mammarella, P.A., a Delaware professional
corporation, as Escrow Agent, and (iii) the Irrevocable Proxy Coupled with an
Interest, dated as of May 10, 1999, entered into by Ernest C. Garcia II in
favor of Henry Toh (the "Proxy"). This letter sets forth our mutual
understanding with respect to the extension of that certain Option (the
"Option") to purchase 2,849,630 shares of the Common Stock, par value $0.05 per
share, of the Company granted by you to the Company pursuant to the Option
Agreement.
1. You hereby agree to amend Section 1(a) of the Option Agreement to
extend the Term (as defined in the Option Agreement) of the Option for an
additional 120 days from the date hereof for and in consideration of the
non-refundable sum of $1 million payable by the Company on August 12, 1999 (the
"Third Payment"), PROVIDED, HOWEVER, that $750,000 of the Third Payment shall be
deducted from the aggregate amount payable by the Company to you upon any
exercise of the Option. As used in the Option Agreement, the Escrow Agreement
and the Proxy, the word "Term" shall mean the Term, as extended by this letter.
2. You agree that Section 1(b) of the Option Agreement is hereby
amended by deleting "$1.50", and inserting "$0.89" in its stead.
3. You agree that Section 4(i) of the Option Agreement is hereby
amended and restated in its entirety as follows:
"i. Either party may terminate this Agreement upon a material
breach by the other party; provided that without otherwise limiting the
rights of the parties, (i) in the event of such a breach by you, you
will return the Payment, one half (1/2) of the Second Payment and the
$1 million payment to be made by the Company to Ernest C. Garcia II
under that certain Letter Agreement, dated as of August 8, 1999 among
the Company,
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Ernest C. Garcia II
As of August 8, 1999
Page 2
Ernest C. Garcia II and Steven Johnson (for purposes of Section 4(c),
(d) and (g) of this Agreement only) and Gordon, Fournaris & Mammarella,
P.A. (the "Third Payment" and, collectively with the Payment and
one-half (1/2) of the Second Payment, the "Payments") to the Company no
later than two business days following demand by the Company; provided
that you shall not be required to return the Payments if the Existing
Directors shall not be in office at the time of such breach, and (ii)
in the event of such a breach by the Company, you shall not be required
to return the Payments to the Company (it being agreed that the
provisions of this Section 4(i) are in addition to and not in
satisfaction of the rights and remedies that each party may have
against the other). In addition, the provisions of Section (a), 2(b)
(solely as it relates to your agreement to cooperate with the Company
and its Board of Directors), 4(c) and 4(e) shall terminate in the event
that the Company fails to exercise the Option."
4. All other provisions of the Option Agreement shall remain unchanged
in full force and effect.
5. You agree that the Escrow Agent shall, upon execution of this
letter, release $750,000 of the Funds (as defined in the Escrow Agreement) from
the escrow and deliver such amount to the Company in accordance with Sections 2
and 3(d) of the Escrow Agreement. You further agree that the Escrow Agreement is
hereby ratified and confirmed.
The Company hereby confirms that after such withdrawal the escrow will
have and retain sufficient funds to cover the balance of the aggregate exercise
price of the Option.
Please confirm your agreement with the foregoing by signing where
indicated below and returning to the undersigned a copy of this letter.
Very truly yours,
NATIONAL AUTO CREDIT, INC.
By: /s/ James J. McNamara
----------------------------
Name: James J. McNamara
Title: Chairman of the Board
ACCEPTED AND AGREED:
/s/ Ernest C. Garcia II
- ----------------------------
Ernest C. Garcia II(*)
/s/ Steven Johnson
- ----------------------------
Steven Johnson
(*) On his own behalf and, for purposes of delivery of 134,000 shares of Common
Stock, on behalf of Verde Investments, Inc., as President
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Ernest C. Garcia II
As of August 8, 1999
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GORDON, FOURNARIS & MAMMARELLA, P.A.
By: /s/ Peter S. Gordon
----------------------------------
Name: Peter S. Gordon, Esq.
Title: President
