National Auto Credit Announces Settlement
12 April 2000
National Auto Credit Announces Settlement
SOLON, Ohio, April 12 National Auto Credit, Inc.
(OTC Bulletin Board: NAKD) ("NAC") announced today that it had reached an
agreement in principle to settle the class action securities litigation filed
against it and certain of its current and former officers and directors in the
United States District Court for the Northern District of Ohio. Under the
terms agreed upon, NAC will pay to the plaintiffs' class $6.5 million in
consideration for, among other things, the release of all defendants from
liability. The settlement is not an admission of liability by any party. The
settlement is subject to preparation of final documentation and court
approval.
David L. Huber, NAC's Chairman and Chief Executive Officer, stated: "We
are pleased to have put this matter behind us at such an opportune time. We
will now be able to devote our attention to assessing the strategic business
alternatives available to NAC and, when a final decision has been reached, to
focus on the business of the company and the enhancement of stockholder
value."
NAC further announced that its Board of Directors had amended the
company's by-laws on April 5, 2000 to establish procedures for action by
written consent without a meeting of stockholders. Generally, the amendment
provides that a stockholder wishing to take action by written consent must
request a record date, after which time the Board of Directors has five
business days to set a record date, which may be no later than five business
days after the Board acts. The amendment also requires that the request for a
record date contain certain information about the proposed action by consent.
If the Board does not set a record date, then the record date is the date upon
which the consent is delivered to the company, absent prior action of the
Board as may be required by Delaware law. To be valid, a written consent
action must be signed by holders of outstanding stock representing not less
than the minimum number of votes necessary to take the corporate action at a
meeting at which all shares are present and voted. The Board of Directors
also adopted a by-law requiring an affirmative vote of eighty percent (80%) of
outstanding shares of each class of voting stock in order to alter, add, amend
or repeal the company's by-laws.
NAC also announced that on April 7, 2000, it filed a complaint in the
Court of Chancery of the State of Delaware captioned National Auto Credit,
Inc. v. Sam J. Frankino, Civil Action No. 17973, seeking injunctive and
monetary relief against defendant Frankino for breaches of fiduciary duty in
his capacity as a director of the company.
On April 7, 2000, Sam J. Frankino delivered to NAC a written consent
purportedly representing the holders of a majority of the outstanding shares
of the company's common stock. The consent action purports to (a) rescind any
and all amendments to the company's by-laws made on or after March 1, 2000
(including those described in the third paragraph of this release); (b)
declassify the Board of Directors of the company; and (c) remove the following
directors from the Board: John Gleason, David Huber, Donald Jasensky, William
Marshall, James McNamara, Philip Sauder, Henry Toh, and Peter Zackaroff.
Messrs. Huber, Jasensky, Sauder and Zackaroff were previously elected to serve
on the Board of Directors by Mr. Frankino.
NAC is reviewing the validity of the written consent. Although this
review is ongoing, the company notes that (i) the consent does not appear to
represent the holders of a majority of the company's outstanding stock, (ii)
the consent was not preceded by a request for a record date as required by the
company's by-laws, and (iii) the consent does not purport to represent an
action by the holders of eighty percent (80%) of each class of the company's
outstanding voting stock, as required for an amendment to the company's by-
laws.
This news release may include statements that constitute forward-looking
statements, usually containing the words "believe," "estimate," "project,"
"expects," or similar expressions. These statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements inherently involve risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. By making these forward-looking statements, the company
undertakes no obligation to update these statements.