EXCHANGE AND REPAYMENT AGREEMENT
By this Agreement dated as of January 31, 2002, the undersigned parties
agree as follows:
RECITALS
The parties entered into a Merger Agreement and Plan of Reorganization
("Merger Agreement") dated December 15, 2000, and related agreements
(collectively with the Merger Agreement, the "Transaction Agreements"). All
capitalized terms not otherwise defined in this agreement shall have the same
meaning or definition as in the Merger Agreement.
The Shareholders acquired common stock, Series B Preferred Stock and
Series C Preferred Stock (collectively, "Capital Stock") of National Auto
Credit, Inc. ("NAC"). The Series B Preferred Stock was subsequently converted by
its terms to common stock. By this Agreement, the Shareholders, including Xxxxxx
X. Xxxxxx ("Xxxxxx"), agree to transfer all of the Capital Stock owned by them
back to NAC in satisfaction of a contingent obligation set forth in the Merger
Agreement. Now, therefore, the parties hereby agree as follows:
1. The parties agree with the decision of management of NAC and New
ZoomLot to terminate the business and operations of, and wind up, New ZoomLot,
and that the First Objective and Second Objective have not and will not be met.
Accordingly, all Forfeitable Shares are deemed forfeited and are being returned
and surrendered to NAC simultaneously with the execution of this agreement.
2. The parties agree that pursuant to its terms, the Series C Preferred
Stock constitutes a liability of NAC in the amount of $935,700 that would become
due on December 31, 2003, and that the discounted current value of the Series C
Stock as of the date hereof is $854,875.
3. Pursuant to Section 1.12 of the Merger Agreement, certain
Shareholders and Xxxxxx are contingently liable to NAC for repayment of the
"Cygnet Payable", as that term is defined in the Merger Agreement. The parties
agree that the amount that Xxxxxx is contingently liable to repay to NAC
pursuant to Section 1.12 of the Merger Agreement as of the date hereof is
$5,690,335 (the "Repayment").
4. In full satisfaction all obligations of Cygnet and the Xxxxxx
Shareholders to make the Repayment:
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x. Xxxxxx and/or the Xxxxxx Shareholders hereby convey and
transfer to NAC 2,077,004 shares of NAC common stock, at a
mutually agreed upon value of $1.25 per share, or $2,596,255
in the aggregate, together with duly executed stock powers.
The Shareholders other than Xxxxxx and/or the Xxxxxx
Shareholders hereby agree to deliver and convey to NAC,
within five (5) days from the date hereof, 1,002,526 shares
of NAC common stock, at a mutually agreed value of $1.25 per
share, or $1,253,157 in the aggregate, together with duly
executed stock powers.
x. Xxxxxx and/or the Xxxxxx Shareholders hereby convey and
transfer to NAC 39,299 shares of NAC Series C Stock at a
mutually agreed value of $538,566 in the aggregate, together
with duly executed stock powers. The Shareholders other than
Xxxxxx and/or the Xxxxxx Shareholders hereby agree to
deliver and convey to NAC, within five (5) days from the
date hereof, 23,081 shares of NAC Series C Stock, at a
mutually agreed value of $316,309 in the aggregate, together
with duly executed stock powers.
c. As a consequence of and subject to the timely transfers set
forth in paragraphs 4(a) and 4(b) hereof, the balance of the
Repayment due to NAC shall be $986,048. Xxxxxx agrees to
repay the foregoing balance of the Repayment obligation on
or before January 30, 2003, together with interest thereon
at 4% per annum through the date of repayment, in cash or in
NAC common stock at the agreed value of $1.25 per share, or
a combination of cash and NAC common stock. In the event
that the Shareholders other than Xxxxxx or the Xxxxxx
Shareholders fail to timely convey NAC capital stock as
required by Section 4(a) or 4(b) above, then the amount due
by Xxxxxx hereunder shall be increased to the extent of such
default.
5. Each party represents and warrants to the other party that:
a. The party has the requisite power and authority to enter
into and perform all of such party's obligations under this
Agreement.
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b. This Agreement has been duly and validly executed and
delivered by the party and constitutes the valid and binding
agreement of such party, enforceable against it in
accordance with its terms (except that enforceability may be
subject to bankruptcy or similar laws, or principles of
equity). No broker or similar person is entitled to any fee
or commission on behalf of such party arising out of this
Agreement.
6. NAC represents and warrants that it has adopted the resolutions
annexed hereto as Exhibit A with respect to exempting Xxxxxx from
the provisions of Section 16(b) of the Securities Exchange Act as
to NAC securities transferred to NAC pursuant to this agreement.
NAC is not currently aware of any claims against Xxxxxx arising
out of the Merger Agreement, and Xxxxxx is not aware of any
claims against NAC arising out of the Merger Agreement (other
than for the indemnification of Xxxxxx under Section 7.3(a) in
connection with currently pending or threatened lawsuits arising
out of the Merger Agreement).
7. In the event any third party should assert any action in the name
of or on behalf of NAC against Xxxxxx on account of any actual or
alleged illegality or impropriety of this agreement or the
consummation of the transactions contemplated hereby, other than
on account of any breach or misrepresentation by Xxxxxx or the
Xxxxxx Shareholders hereunder, NAC agrees that it will bear the
reasonable legal defense costs (i.e., reasonable attorney's fees
and disbursements, and expert witness fees and expert witness
costs) arising from the defense of such claims, provided that
such legal defense is provided by the same law firm that is also
representing NAC or NAC's directors in connection with such
defense. Xxxxxx agrees to execute such conflict waivers as the
law firm may reasonably require. In the event such law firm
determines that it cannot represent Xxxxxx, or in the event
Xxxxxx determines to engage defense counsel of his own choosing
to defend such claims as a result of NAC's counsel, or NAC's
directors' counsel's, failure to competently represent him, he
may engage counsel of own choosing, provided such counsel is
reasonably satisfactory to NAC, and NAC shall bear the reasonable
attorney's fees incurred by Xxxxxx. NAC shall not have either the
authority or the obligation to settle any such claims asserted
against Xxxxxx or the Shareholders.
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8. NAC, Xxxxxx, and the Xxxxxx Shareholders hereby agree that upon
the delivery to NAC of the NAC Securities described in paragraphs
4(a) and 4(b) hereof, the Registration Rights Agreement and the
Lock-Up, Standstill and Voting Agreement are deemed terminated
and all rights, obligations and claims arising under those
agreements are deemed released.
9. Subject to the timely delivery to NAC of the NAC Securities
described in paragraphs 4(a) and 4(b) hereof, on May 03, 2002,
all rights, obligations and claims arising under the Merger
Agreement are deemed terminated and released, except for (1)
claims arising under the Merger Agreement that are asserted by
one party against the other prior to May 3, 2002; and (2) the
right of indemnity set forth in the final sentence of Section
7.3(a) of the Merger Agreement.
10. Xxxxxx and the Xxxxxx Shareholders represent and warrant that
they own (or will own at the time of transfer to NAC) the shares
of Capital Stock to be transferred hereunder, free and clear of
all liens, security interests or claims.
11. This Agreement constitutes the entire agreement with respect to
the subject matter hereof and supersedes all other prior or
contemporaneous agreements, written or oral, among the parties.
This Agreement shall be binding upon the successors and assigns,
heirs and legatees of the parties. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to conflict of law
principles thereof. Each party shall bear its own costs and
expenses in connection with the negotiation of this Agreement.
This Agreement may be executed in two or more counterparts each
of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date set forth above.
NATIONAL AUTO CREDIT, INC., a Delaware corporation
By: ___________________________________
Name: Xxxxx X. XxXxxxxx
Title: Chief Executive Officer
CYGNET CAPITAL CORPORATION, an Arizona corporation
By: _____________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Secretary
VERDE REINSURANCE COMPANY, LTD., a Nevis Island
corporation
By: ___________________________________
Name: Xxxxxx X. Xxxxxx, XX
Title: Managing Director
XXXXX XXXXXX III 2000 TRUST
By: ___________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Trustee
XXXXX XXXXXX 2000 TRUST
By: ___________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Trustee
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EJMS INVESTORS LIMITED PARTNERSHIP,
an Arizona limited partnership
By: SMJE INVESTORS, LLC, an Arizona limited
liability company, the General Partner
By: ____________________________________
Name: ___________________________
Title:___________________________
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XXXXXX X. XXXXXX, XX
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XXXXXX X. XXXXXXX
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XXXXX XXXXXXX
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