ZoomLot Acquisition and Stock Repurchases Announced by National Auto Credit, Inc.
20 December 2000
ZoomLot Acquisition and Stock Repurchases Announced by National Auto Credit, Inc.
SOLON, Ohio, Dec. 20 National Auto Credit, Inc.
(OTC Bulletin Board: NAKD) (the "Company") announced today that it has entered
into an agreement to acquire ZoomLot Corporation ("ZoomLot") and an agreement
to repurchase all of the Company's securities held by Reading Entertainment,
Inc. and certain of Reading's affiliates.
The Company entered into an agreement with ZoomLot and its shareholders
pursuant to which the Company will acquire ZoomLot by means of a merger of
ZoomLot into a wholly owned subsidiary of the Company. In consideration for
the transfer of ZoomLot to the Company, the Company will issue to the ZoomLot
shareholders preferred stock equivalent to 10,000,000 shares of the Company's
common stock. Two-thirds of such stock will be subject to forfeiture if,
following the acquisition, certain financial performance objectives are not
met by ZoomLot. More particularly, one third of such stock will be forfeited
if, by December 31, 2003, ZoomLot has not achieved at least $4.5 million of
earnings before interest, taxes, depreciation and amortization for a period of
twelve (12) consecutive months. The other one-third will be forfeited if, by
December 31, 2003, ZoomLot has failed to achieve such earnings and has also
failed to break even on a cash basis for a minimum period of six (6)
consecutive months. However, if certain "valuation events" should occur prior
to December 31, 2003, those financial performance objectives will be deemed to
have been achieved. Such valuation events generally consist of either (a)
transactions that would involve investment in ZoomLot or one of its
subsidiaries of at least $10 million and the pre-investment valuation of
ZoomLot or any subsidiary of ZoomLot is at least $30 million, (b) a change of
control of the Company or (c) the termination of the key executives of ZoomLot
without cause.
Additionally, as part of the transaction, the Company has committed to (1)
provide up to $6.5 million in financing to ZoomLot, subject to certain
performance and development criteria being met, and (2) advance funds to
ZoomLot to enable it to repay approximately $5 million advanced to ZoomLot by
certain ZoomLot affiliates, which repayment will be refunded to the Company if
the financial performance criteria referred to above are not met, and the
valuation events referred to above do not occur, by December 31, 2003. Also,
the sellers of ZoomLot have entered into certain standstill, voting and
corporate governance arrangements with the Company.
ZoomLot provides business-to-business e-commerce solutions to independent,
or non-franchised, used car dealerships, finance and insurance companies and
other participants in the used car industry. ZoomLot's objective is to
rapidly develop and capitalize on a position as a vertical market maker by
creating a digital marketplace in the used car industry that will support
large numbers of transactions and users and bring financing, insurance,
warranty and other back office transactions "online".
The Company also announced that it entered into an agreement to repurchase
from Reading Entertainment, Inc. and certain Reading affiliates (collectively,
"Reading") approximately 4.8 million shares of the Company's common stock
owned by them for an aggregate purchase price of approximately $8 million.
Pursuant to the terms of the agreement entered into with Reading, Reading and
the Company have agreed to certain standstill restrictions and other matters,
including the indemnification of Reading against certain liabilities.
In connection with these transactions, Messrs. James J. Cotter and Mr.
Scott A. Braly, who were designated by Reading to serve on the Company's Board
of Directors, have agreed to resign from the Board.
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
1993. 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 for revisions or changes
after the date of this document.